Lyft, the domestic rideshare operator, has been falling behind Uber in the ride-hailing market. Despite beating Q1 2023 earnings expectations, Wedbush analyst Dan Ives claims that Lyft has lost all street credibility after the disastrous Q4 2022 earnings conference call and the hunt for a new CEO. Additionally, Lyft’s metrics are far worse than that of Uber. Despite this, the company still has $1.75 billion in cash and has recently launched a price war against Uber, spurring growth in rideshare for the first time in two years. However, the company did cut Q2 2023 guidance, raising concerns about its future.
Lyft’s new CEO, David Risher, who joined on April 17, 2023, has prioritized cost-cutting measures, such as laying off 27% of its workforce, eliminating 250 open positions, and implementing price cuts, to preserve the company’s market share and finance its operations. However, engaging in a price war of attrition will be detrimental to Lyft, despite its cash pile. Risher anticipates annual savings of $330 million from the cost cuts and layoffs.
On May 4, 2023, Lyft announced its Q1 2023 results, with adjusted earnings per share (EPS) profit of $0.07 and revenues of $1.1 billion. Active riders increased to 19.5 million, while the contribution margin declined to 46.5%. Additionally, Lyft lowered its Q2 2023 revenue expectations to between $1 billion and $1.02 billion.
Wedbush analyst Dan Ives believes little has changed, and the company is waiting to see if Lyft’s new CEO can turn the ship around. Meanwhile, DA Davidson has lowered its price target to $9.75 from $12.50 and maintained a Hold rating. Bank of America reiterated its Underperform rating and reduced its price target from $10 to $8.50 due to increased competition from Uber.
Lyft has been in a weekly falling price channel since peaking at $18.58 in August 2022, creating lower lows and bounces. Despite making an impressive bounce in December 2022 and hitting a high of $11.22 in May 2023, shares plummeted, reaching new all-time lows in March 2023, at $8.05. With the daily stochastic trending downwards, Lyft’s share price could find support levels at $7.50, $6.42, $5.48, and $5.02.
In conclusion, whether to invest in Lyft stock is a matter of personal preference, as there are pros and cons to consider. If the company can maintain its cost-cutting measures while stimulating growth, it could be a good investment. However, its declining market share and reduced Q2 guidance could continue to hinder its growth potential.
The article “Is There Value Left in Lyft Stock? ” first appeared on MarketBeat.
Image by Thought Catalog on Unsplash