Lyft posts USD2.6B 2019 loss, keeps Q4 2021 profit forecast

Marco Green
February 14, 2020

The news sent Uber's stock price soaring. Lyft provided Q1 2020 revenue guidance between $1.055 billion and $1.060 billion but it did not address its profitability target in its earnings press release. The stock slipped to as low as US$50.82 in extended trading, after closing at $53.94 earlier in NY. Uber reported upbeat fourth-quarter results earlier this month. In essence, Lyft's specifically focuses on passengers and consumer transportation, while Uber is working on a few different projects, such as food delivery, developing its own self-driving cars, or passenger drone technology. Many analysts generally approve the company's decision to sell its Eats business in India to local competitor Zomato, which they take as a sign that Khosrowshahi takes the issue of "discipline" seriously. "Uber has a more aggressive timeline", he said, but added that Uber "made some assumptions", such as planned reductions in price discounts, while making those projections.

While Lyft reported record quarterly revenue of more than $1 billion, it failed to change its target to achieve profitability on an adjusted basis by the end of 2021. Analysts had been expecting EPS of $1.13 on sales of $749 million. The company posted a loss of US$356 million or US$1.19 per share, slightly narrower than analysts' expectations of US$1.38 per share. "We significantly improved our path to profitability while simultaneously reaching critical milestones toward our long-term strategy", said Logan Green, co-founder and chief executive officer of Lyft. Or will the more focused Lyft, which has adhered to the United States and Canada and remained focused on transportation, become the most stable business? The company's strategy has been to move further into existing markets to capture more active riders and increase how much they spend on Lyft services. Past year was the first time the company had combined all mobility options on its app, a strategy created to drive greater revenue per rider in 2020. Net loss came in at $256 million versus $248.9 million year-over-year, with Lyft noting that the figure included $207.3 million of stock-based compensation and related payroll tax expenses.

Going to the growth side of things, Wall Street expected active riders of 22.8 million.

This is one of the reasons many investors prefer Lyft compared to Uber, due to the simpler and more focused approach, as well as the fact that it is focused on the North American market mainly, which is the most profitable ride-hailing market in the world.

Uber and Lyft, both based in San Francisco, are pursuing different roads in search of profitability, with Uber pouring money into side businesses which have so far lost money and Lyft remaining focused exclusively on moving people around. Last month it said it would cut 90 jobs as part of a larger restructuring effort.

"If you're losing as much money as Uber, it makes sense to leave those businesses to other companies who have the competency", said Dan Morgan, portfolio manager at Synovus Trust.

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