Lyft Jumps 6% As Active Riders Return In 3Q; Needham Says Buy

Shares of Lyft are advancing 5.7% in pre-market trading on Wednesday after the ride-hailing giant said it witnessed a sharp recovery in active riders in 3Q from the previous quarter. The company’s number of active riders rose 44% to 12.5 million in 3Q on a quarter-over-quarter basis, but dropped 44% from the year-ago level.

Meanwhile, Lyft’s (LYFT) 3Q revenues of $499.7 million declined 48% year-over-year but beat the Street consensus of $487.4 million. Revenues grew 47% on a quarter-over-quarter basis. The company 3Q adjusted EBITDA loss of $239.7 million compared to a loss of $254.1 million expected by analysts, reflecting lower costs. On an adjusted basis, it incurred a loss of $280.4 million in 3Q, more than doubling from the loss of $121.6 million in the year-ago period.

Lyft’s CEO Logan Green said “we are encouraged by the ongoing recovery in ridesharing and the performance improvements we saw across bikes, scooters and fleet. We remain confident that demand will continue to return as we progress through the recovery.” Further, Lyft’s CFO Brian Roberts commented “we can achieve adjusted EBITDA profitability with a ride volume approximately 5% to 10% below the level in Q4 of ’19.”  (See LYFT stock analysis on TipRanks).

As for 4Q, the company expects revenues to increase by 11% to 15% on a quarter-over-quarter basis.

Following the results, Needham analyst Brad Erickson maintained a Buy rating on the stock with a price target of $41 (13.7% upside potential) “on broad views of a wall-of-worry to be climbed on LYFT’s way to profitability.” Erickson believes though that “incremental multiple expansion owed to food or retail delivery aspirations is likely preemptive at this point.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 17 Buys and 7 Holds. The average price target of $44.24  implies upside potential of about 22.7% to current levels. Shares have declined 16.2% year-to-date.

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