Lyft (NASDAQ: $LYFT) Soars 35%+ On Upbeat Earnings and Outlook

Rideshare company Lyft, Inc. (NASDAQ: $LYFT) is an American company based in San Francisco, CA, that provides Transportation-as-a-Service (TaaS) through the Lyft platform and mobile apps. It offers ride-sharing, scooter and bike rentals, autonomous vehicles, and various transportation options. 

On Tuesday, 134th February 2024, Lyft reported better-than-expected fourth quarter and full-year fiscal 2023 results. However, an error in its initial report caused the stock to skyrocket. The stock continued rising after the mistake was corrected on the strength of its results in the fourth quarter. 

Fourth Quarter and Full-Year 2023 Results

Lyft reported strong Q4 earnings and full-year 2023 results, with gross bookings and riders reaching all-time highs. Q4 earnings of revenues rose to $1.22 billion. Gross bookings for Q4 grew 17% year-over-year to $3.7 billion, while full-year gross bookings were up 14% to $13.8 billion, above analysts’ estimates. 

The number of rides in Q4  grew 26% year-over-year to 191 million. For fiscal 2023, Lyft facilitated 709 million rides, up 18% year-over-year, by over 40 million riders, the highest annual ridership in the company’s history.  

The company significantly narrowed losses in Q4 to just $26.3 million, compared to a $588 million loss in Q4 2022. Net losses narrowed to $340.3 million for the full year from $1.6 billion IN FY22. Adjusted EBITDA also swung to a profit of $66.6 million in Q4 from a loss of $248 million a year prior. The full-year adjusted EBITDA was $222.4 million compared to a $416.5 million loss in FY22.

Initially, the figures appeared even rosier due to a typo in the earnings release that claimed Lyft’s 2024 adjusted EBITDA margins would expand 500 basis points from 2023 levels. However, management clarified during a conference call with analysts that margins would grow 50 basis points year-over-year.

The mistake lit up trading algorithms, with the shares rocketing nearly 70% higher in the after-hours market. The gains were pared down after the correction, but the stock still closed trading 37% higher on Wednesday, February 14, 2024, as analysts focused on the company’s progress to profitability.

CEO & CFO Statements

In the earnings release, recently appointed CEO David Risher attributed the performance to Lyft’s “customer obsession,” which is “driving profitable growth.” He highlighted how every Lyft ride connects people to important destinations in their lives.

CFO Erin Brewer said the Q4 results “demonstrate the team’s incredible work to build a solid foundation for profitable growth.” She said Lyft has “a lot of momentum and a clear focus on operational excellence” as it enters 2024.

On the subsequent conference call, Risher said 2023 validated Lyft’s belief that customer obsession could drive growth and profitability. Meanwhile, Brewer noted that Lyft outperformed guidance for gross bookings and adjusted EBITDA, showing it had a lid on expenses and incentives.  

Financial Outlook for 2024  

For FY24, Lyft expects to generate positive free cash flow for the first time; it forecasts that roughly half of its expected adjusted EBITDA will convert to free cash flow. Lyft also expects double-digit revenue growth from rides and total gross bookings to outpace ride growth modestly. Furthermore, the company forecasts 50 basis points of adjusted EBITDA margin expansion.

In Q1 2024, Lyft predicts gross bookings of $3.5 billion to $3.6 billion, an adjusted EBITDA of between $50 million and $55 million, and an adjusted EBITDA margin of 1.4% to 1.5%.  

Lyft Stock Performance 

Lyft stock surged over 35% to close at $16.39 on February 14, 2024, a $4.26 rise. This followed 50-60% gains in the after-hours trading on February 14, 2024, triggered by a typo in the initial press release. 

However, analysts noted the actual Q4 results still beat expectations on the key metrics of bookings, revenue, and profitability. Multiple analysts raised their price targets while remaining mostly neutral, given execution risks.

From a technical standpoint, Lyft stock broke out above its 21-day and 50-day moving averages with the recent jump. The company’s IBD relative strength rating of 85 out of 99 also indicates strong momentum versus other stocks over the past year.  

Is Lyft Stock Worth Buying in 2024?

The positive Q4 performance, first-ever full-year profitability guidance, and over 35% single-day stock jump paint an improving picture for Lyft in 2024. Its Q4 results signal that management has tackled the demand uncertainty and margin pressures that have plagued operations and shares over the past three years. 

However, risks remain regarding the competitive landscape with Uber and potential recession impacts on discretionary spending. Lyft also has a history of execution stumbles. As such, analysts remain largely neutral, awaiting further confirmation of the turnaround.

Risk-tolerant investors could view the current momentum as a buying opportunity. However, conservation investors may prefer waiting another quarter or two to see if positive booking trends, ridership, and profitability trends continue. Ultimately, Lyft’s customer usage and loyalty in a challenging economic climate will determine if 2024 is truly a breakout year.

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