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Lyft Posted Strong Earnings: Will Uber Stock Take a Ride?

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On Wednesday, Lyft (LYFT) announced its third-quarter earnings during after-market hours. The company’s earnings beat the market expectations. Lyft’s revenues rose 63.36% to $955.6 million. The analysts surveyed by Reuters expected revenues of $915 million. The EBITDA losses of $128.1 million beat the expectation of a loss of $206.3 million. The net losses were also narrower than expected at $463.5 million.

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Lyft stock, which gained 0.98% on Wednesday, rose 3.54% in pre-market today at 8:00 AM ET. Uber stock, which rose 4.1% yesterday, was riding on Lyft’s earnings wave with 0.74% gains at the same time in pre-market today. The mood in the broader market was somber. The S&P 500 (SPY) futures fell 0.35%, while the Dow futures (DIA) fell 0.32%.

Lyft’s riders and ARPAR rose

During the third quarter, Lyft reported 22.3 million riders—a 28% rise compared to 17.4 million in the third quarter of 2018. The ARPAR (average revenue per active rider) increased 27% to $42.8 in the third quarter from $33.6 in the third quarter of 2018. The higher ARPAR is especially significant. Notably, the ARPAR shows that Lyft has been able to get more out of each rider’s pocket.

The increasing number of riders, rising ARPAR, and narrowed losses aren’t the only good things about Lyft’s earnings. The company also raised its 2019 revenues guidance to $3.57 billion from the earlier guidance of $3.48 billion—a $90 million increase. The increase translates to annual revenue growth of 66%. The EBITDA loss guidance narrowed to $713 million at the midpoint from the earlier guidance of $862.5 million at the midpoint.

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What are analysts saying about Lyft stock?

Analysts are largely positive on Lyft stock. Among the 39 analysts, 24 recommend a “buy,” 13 recommend a “hold,” and two recommend a “sell.” Analysts’ average target price for Lyft stock is $69.83, which implies a healthy 53% upside based on its current price.

Uber’s earnings are coming!

Uber will release its third-quarter earnings on November 4. The company will likely report $3.7 billion in revenues and $1.4 billion in losses during the quarter. However, analysts are largely bullish with an average “buy” rating with 44% potential upside over Wednesday’s close. The lockup period for Uber shares expires on November 6.

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