Friday, 7 June 2024
by BD Banks
Shares of Lyft (NASDAQ: LYFT) were moving higher today after the ride-sharing operator offered 2027 targets for the first time at its inaugural Investor Day conference this morning.
Those goals and the general commentary from management seemed to please investors, and the stock was trading up 4.1% as of 10:41 a.m. ET, after gaining as much as 11% earlier in the session.
Image source: Getty Images.
Lyft said it expected to deliver a gross bookings compound annual growth rate of 15% between this year and 2027. It also forecast an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin of 4% as a percentage of gross bookings, meaning EBITDA margin should be in the double digits as a percentage of revenue.
Finally, management said nearly 90% or more of that EBITDA would convert into free cash flow.
Lyft also reaffirmed its 2024 guidance, calling for $4 billion to $4.1 billion in gross bookings in the current quarter and rides growth in the mid-teens for the full year, among other targets.
CEO David Risher said:
Lyft’s customer-obsessed strategy is working. Our execution keeps getting better. We’re delivering industry-leading innovation, and we are working closely with partners to create great shared customer experiences.
Lyft is still down sharply from its IPO price as the impact of the pandemic and a price war with Uber Technologies hit the stock hard.
However, a detente with Uber and a shift in strategy under new management, including a renewed focus on customer initiatives like women+ connect and tapping advertising as a new revenue stream, is paying off, and the stock still looks cheap considering its growth potential.
While Lyft is still losing money on a generally accepted accounting principles (GAAP) basis, its profitability is rapidly improving. The stock can keep moving higher from here.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool has a disclosure policy.