The stock was sliding on Friday after another analyst pointed to increased competition from Uber Technologies.
On Friday, RBC analyst Brad Erickson told Lyft. lowered your rating‘s
Shares to outperform sector to outperform. He lowered his price target to $16 from the earlier $30.
Their reasoning is simple: Competition from Uber has intensified for Lyft, and the company’s long-term profit goals limit its ability to spend and grow its market share.
Ericsson’s analysis of 400 rides showed that Lyft’s pick-up times were on average 10% slower than Uber’s, in contrast to its analysis in July, March and October 2021, when Lyft was faster. Since both companies went public, Uber’s pickup times have been faster than Lyft’s in only one other instance, RBC calculated.
“This may suggest that Uber’s improved driver supply rebound … may ultimately manifest in giving Uber a structural ride conversion advantage,” he said.
Lyft opposed RBC’s take, saying the sample used by the firm was “too small”. In the third quarter, which ended in September, the company saw the most active drivers in two years, a Lyft spokesperson told Polygon. baron’s,
Still, the stock was down 8.6% on Friday at $12.53, while the Nasdaq Composite dropped 2.6%. Shares are down 71% this year as the company gave investors a series of disappointing forecasts. Uber’s stock is down 33 percent this year.
Lyft expects to generate $55 million to $65 million in adjusted earnings before interest, taxes, depreciation and amortization for the third quarter. The midpoint of the range was below the consensus of $61.3 million among analysts tracked by FactSet.,
But Ericsson has a problem with its 2024 target of $1 billion in adjusted EBITDA. While working toward profitability is a good thing, Eriksson thinks it also has the potential to limit Lyft’s ability to acquire a geographic stake.
The company has historically had a strong presence in the West Coast, particularly in Los Angeles, but Uber continues to outperform as it makes more cars available. RBC’s analysis shows that Uber is seeing lower pickup times for the first time since May last year, which could be a challenge for Lyft.
About a week ago, UBS analyst Lloyd Walmsley also pointed to headwinds from Uber’s market growth. “Uber not only has a lion’s share of the market, its onboarding process is fast and it provides drivers with more earning opportunities,” Walmsley said.
Lyft said it would publish its third-quarter results in early November. It is expected to generate 6 cents in profit per share on sales of more than $1 billion.
Write to Karishma Vanjani at [email protected]
Credit: www.marketwatch.com /