Ride-sharing leader Lyft (LYFT) had its share of troubles back in 2020. With nowhere to go, there was little call for ride-sharing in general. Lyft had some other operations to fall back on but losing ride-sharing hurt.
With economies reopening, so too is the call for ride-sharing. Lyft’s results on this front have been impressive. This recovery is a great sign and leaves me slightly bullish on Lyft going forward. (See Analysts’ Top Stocks on TipRanks)
Lyft’s year so far has been marked by peaks that turn into plateaus, before dropping into valleys. The company spent a good chunk of January struggling to break the $50 mark. A small drop to the $43 range marked the end of January. Then February saw an explosive upward rise.
May, however, sent the stock on a huge downward drop, but this drop wouldn’t last long either. By the end of May, the stock was already recovering toward the $60 range, and June would see several days where the stock closed over $60. A series of ups and downs leave us once again struggling to clear $50 per share. (See Lyft stock charts on TipRanks.)
The company’s latest earnings report illustrates how well the quarter went. The company posted an adjusted $0.05 per share against an expected loss of $0.03 per share.
Additionally, Lyft reported that its number of active riders was on the rise as well. The company posted 18.9 million active riders this quarter. This compares well against the 12.5 million it saw this time last year. Revenues per rider were also up 14.2% year-over-year, suggesting that Lyft is on its way back.
When the Primary Business Model Recovers
The good news for Lyft is that it’s now firing on all cylinders once more. Previously, it was largely restricted to making money from deliveries alone. Now it can engage in ride-sharing again to the fullest.
Better yet, there doesn’t seem to be much political will afoot for further lockdowns. The chances of that coming back is comparatively slim. Even if it does, this time, Lyft will be ready. Having that contingency covered is good news for investors.
2020 blindsided a lot of businesses. The idea that a government could shut down large portions of an economy was likely unthinkable to most. That businesses in turn might have to set up a plan where they could continue to operate without being able to be in the same room as other people was unfathomable as well. You can imagine what this does to a company like Lyft.
With the lockdowns now largely gone and the world at least approaching 2019 normalcy, Lyft can freely operate once more. This is especially good news going into the end of the year. Major holidays are approaching, and with them, celebrations that can call for a ride home.
A 2018 study refers to one of the biggest drinking days of the year, and it’s not New Year’s Eve. It’s Blackout Wednesday, the day before Thanksgiving. Beer sales were up 270% and liquor sales were up 114%. Growler sales were up 658%, the study found, which means a lot more booze and a lot more calls for Lyft.
Wall Street’s Take
Turning to Wall Street, Lyft has a Moderate Buy consensus rating, based on 14 Buys and six Holds assigned in the past three months. The average Lyft price target of $70.24 implies 41% upside potential.
Analyst price targets range from a low of $58.00 per share to a high of $95.00 per share.
Concluding Views
A reopened world is great news for Lyft. It means that Lyft can start delivering the full range of options to its customers. Also, investors should consider the company’s recovering numbers as seen in its earnings reports.
Yes, it will constantly face the shadow of its biggest competitor, Uber (UBER). Uber’s presence hasn’t precluded Lyft’s survival for this long, however. That, coupled with the results already seen, paints a very solid picture that provides good reasons to be bullish on Lyft.
Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
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