Hey, Lyft, Uber Has You Beat: 4 Analysts Discuss Weak Guidance, Q4 Earnings Miss

LYFT Inc LYFT shares tumbled Friday morning after the company disappointed Wall Street with its weak guidance.

On Thursday, Lyft reported a fourth-quarter adjusted EPS loss of 74 cents, missing consensus analyst estimates of a 13-cent profit. The San Francisco-based company reported $1.18 billion in revenue, beating consensus estimates of $1.16 billion. Revenue was up 21% from a year ago.

Lyft reported 20.4 million active riders in the quarter, roughly flat compared to the third quarter but up 8.7% from a year ago. Lyft reported $57.72 in revenue per active rider.

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Lyft partially blamed $201.3 million in stock-based compensation and related payroll tax expenses, as well as restructuring charges related to its recent wave of layoffs for the earnings miss.

Looking ahead, Lyft guided for first-quarter revenue of $975 million, up from $876 million a year ago but well short of analyst estimates of $1.09 billion.

Growth Struggles: RBC analyst Brad Erickson said ridesharing investors should stick with Uber Technologies Inc UBER for now.

"To us, these results reinforce our thesis that LYFT is at a structural competitive disadvantage vs. UBER in terms of market share, driver supply and expenses," Erickson wrote.

Morgan Stanley analyst Brian Nowak said Lyft has been relying on pricing rather than volume to drive its growth numbers.

"These results speak to how Uber’s scale (riders, drivers and liquidity), ability to cross-sell across rides and eats, and the growing base of higher value UberOne loyalty members is having an impact and holding back LYFT's ability to grow through either trips or pricing," Nowak wrote.

Uncertain Outlook: KeyBanc analyst Justin Patterson downgraded Lyft and said the company's long-term financial targets and market share are uncertain.

"With ~2/3 of the q/q decline in revenue coming from less Prime Time activity and reducing prices to match its competitor, we have more questions on whether revenue can achieve mid-to-high teens growth in 2023E," Patterson wrote.

Bank of America analyst Michael McGovern said Lyft is facing 2023 insurance and pricing headwinds.

"Company reports suggest that Uber is taking share in the ridesharing market in the post-pandemic recovery, creating scale issues for Lyft (i.e. driver supply)," McGovern wrote.

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Ratings And Price Targets:

• RBC has a Sector Perform rating and lowered the price target from $16 to $11.
• Morgan Stanley has an Equal-Weight rating and lowered the price target from $17 to $11.
• KeyBanc has a Sector Weight rating.
• Bank of America has an Underperform rating and lowered the price target from $11.50 to $10.