Lyft's AV Plans, Rider Increase, Ads Drive Fuel Up To 70% Upside: Analyst

Tigress Financial analyst Ivan Feinseth maintained Lyft LYFT with a Buy and raised the price target from $26 to $28 on Wednesday.

Feinseth noted that Lyft reported a record start to the year, driven by its multifaceted strategy focused on service quality, innovation, and market expansion. This strategy drove records in active rides, riders, driver hours, and gross bookings, driven by strong service demand in both commuting and weekend travel.

Lyft reported first-quarter revenue increased 14% to $1.5 billion. Gross bookings increased 13% to $4.2 billion. Rides increased 16% to a record 218.4 million. Active Riders increased 11% to a record 24.2 million.

Also Read: Lyft Is Executing Well But Analysts Caution About Uber And Waymo Competition

Lyft continues to invest in AI-driven technologies to enhance its Rider and Driver experience while increasing operational efficiency and safety. Advertising continues to drive expanding Rider connections and incremental revenue growth, as per the analyst.

He noted that Lyft has introduced several key growth initiatives, including launching its Earnings Assistant, an industry-first tool powered by AI that helps drivers maximize their time on the road and optimize their earnings through personalized driving plans and real-time guidance.

He said Lyft has also introduced its Smooth Cruiser score, which gives drivers feedback on their performance and suggests ways to provide better rides.

Lyft continues to invest in multiple key growth initiatives, including targeting unrepresented demographics and geographies, along with ongoing technology innovation, as per Feinseth.

Lyft launched Lyft Silver, a service designed for adults 65 or older, an untapped demographic that makes up about 5% of Lyft riders. He noted that 70 million Americans are expected to reach 65 years or older by 2030.

The analyst said that Lyft focuses on targeted geographic growth, emphasizing smaller, car-dependent cities like Indianapolis, where rides grew 37% in the first quarter.

He noted that Lyft is actively expanding its advertising initiatives through its dedicated Lyft Media, which includes in-app ads, in-car displays, and exterior vehicle signage to engage riders and generate additional revenue.

Feinseth said Lyft is expanding internationally for the first time with the recent acquisition of the European taxi-handling app FREENOW.

The analyst noted that autonomous vehicle service will be a significant growth driver and catalyst as Lyft prepares to launch autonomous vehicle rides in cities including Atlanta and Dallas through partnerships with companies such as Mobileye Global Inc MBLY and May Mobility.

Other growth drivers include Wait & Save, which allows consumers to choose to wait a little longer and save some money. This indicates a willingness to offer discounts to attract demand, as per Feinseth.

Increases in ride volume and service initiatives combined with operating efficiencies and target market expansion are accelerating business performance trends, including increasing return on capital, positive economic profit, and a significant increase in shareholder value creation, as per the analyst.

He said that Lyft increased its share repurchase authorization to $750 million, with plans to purchase $500 million in stock over the next twelve months and $200 million within the next three months.

Feinseth noted that the shares have a significant upside, and his 12-month target price of $28 represents a potential return of close to 70% from current levels.

Price Action: LYFT stock is down 3.84% at $16.25 at last check on Wednesday.

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