Lyft (LYFT) Beats Q2 Estimates, Firms Raise PTs on Accelerating Demand

August 4, 2021 7:39 AM EDT
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Shares of Lyft (NASDAQ: LYFT) are up about 1% in pre-open trading Wednesday after the company delivered better-than-expected Q2 earnings.

LYFT made a loss of $0.05 per share to beat the $0.24 per share loss analysts were calling for. Sales came in at $765 million to again top the Street’s consensus of $696.9 million.

Active riders were reported at 17.14 million, higher than the 15.45 million expected from analysts. However, revenue per active rider missed on analyst estimates - $44.63 vs $46.36 expected. The company reported 17.14 million active riders, up over 3.6 million riders from Q1.

“We had a great quarter. We beat our outlook across every metric and we have growing momentum,” said Logan Green, co-founder and chief executive officer of Lyft.

The company’s CFO, Brian Roberts, added:

“Q2 was truly exceptional. We grew Active Riders by more than 3.6 million from the prior quarter, generated 125% year-over-year revenue growth and achieved Adjusted EBITDA profitability. At the same time, drivers shared in this outperformance with record hourly earnings. And in July driver earnings remained strong as demand for our platform continued to grow despite increases in reported COVID case counts.”

Morgan Stanley analyst Brian Nowak raised the price target on EW-rated LYFT to $72.00 per share from $70.00 to reflect higher '21/'22 EBITDA estimates (up ~$150mn/$65mn).

“LYFT’s $24mn of 2Q EBITDA (including ~$16mn of one-time benefits) was better than expected. Going forward, the company also expects to remain profitable, balancing growth and profitability but leaning toward growth. This is no different than Uber (which we expect to continue to lean into investment while reaching/maintaining profitability) with Uber’s scale (~4X larger rideshare bookings base, a ~$50bn eats bookings business) the delta and long-term advantage,” Nowak writes in a note sent to clients.

On driver subsidies, Nowak says trends are headed in the right direction.

“If demand comes back stronger, LYFT does expect to further increase driver investment (which makes sense strategically). Looking into '22, we expect the Sept sun-setting of gov’t subsidies, higher vaccination rates and less robust consumer balance sheets to further solve this driver imbalance (and perhaps dynamics like holiday shopping budget needs will help along the way too),” the analyst said in a note.

JMP analyst Ronald Josey also raised the price target to $76.00 from $75.00 previously. His rating on LYFT remains “Outperform.”

“While the continued risk around COVID-19 and the disease’s variants could impact Lyft’s (and really travel’s) overall recovery, with demand rebounding (Lyft added 3.6 million net active riders in the quarter), its transportation network normalizing as driver supply improves (though not yet fully recovered), and with the company now self-funding growth, we believe Lyft is emerging from the pandemic as a stronger overall platform,” Josey wrote in a note sent to clients.

Similar to Nowak, Josey focuses on the driver supply-demand situation as the latter continues to outpace the former, resulting in higher overall pricing.

“The good news here is that driver supply is improving with Lyft drivers +50% Q/Q in 2Q and another +11% M/M in July. Much of this is from Lyft’s investments in driver incentives through lower company take-rates and greater sign-on bonuses and we note Lyft paid out $375 million (+92% Q/Q) in incentives in 2Q21. With drivers earning $35+ per hour in Lyft’s busiest markets and federal unemployment benefits expected to sunset on September 6—in states where benefits expired early, Lyft is seeing an increase in driver applicants—we look for driver supply to more balance demand by 4Q, and we note Lyft plans to continue investing heavily in supply in 3Q,” he concludes.

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