After five largely rough weeks of trading, Lyft (NASDAQ:LYFT) will have its first chance to redeem itself on Tuesday. The country's second-largest ridesharing service will report its first-quarter results shortly after the market close, and there's going to be a lot riding on Lyft's first financial update as a public company.
Wall Street's holding out for another steep quarterly loss on heady top-line growth. Analysts see revenue clocking in at $740.2 million, 86% ahead of the $397.2 million it rang up a year earlier. Wall Street's all over the map when it comes to sizing up Lyft's bottom-line potential. The consensus estimate is a loss of $1.81 a share, but the per-share range for the deficit is as cruel as $4.73 and as kind as $0.63. Put another way, everyone is expecting red ink on another huge spike in revenue.
Fixing a broken IPO
Lyft has been a rough ride for shareholders since its initial pop after going public at $72 in late March. Investors are moving to the sidelines, waiting for market leader Uber to go public. Uber isn't growing as quickly as Lyft, but it's generating more than five times the revenue.
Uber's ability to expand internationally and apply its platform to meal delivery are aspirational goals for Lyft, but until then, it will remain a distant second fiddle in this high-priced hoedown. Lyft can change the narrative on Tuesday afternoon with a blowout performance.
Lyft may seem to be lost cause -- having closed above its IPO price in just two of its first 26 days of trading -- but a lot of metrics are moving in the right direction. Active riders, average revenue per rider, the percentage of bookings coming back to Lyft as revenue, and its contribution margin are all trending higher. There's no denying that Lyft is losing a lot of money, but there are economies of scale here.
It will take years for Lyft to achieve profitability. Analysts don't see Lyft turning that corner until 2023 at the earliest. However, a strong report out of Lyft showing that it continues to grow beyond the 18.6 million active riders it had in the final quarter of 2018 and that all of its metrics keep pointing to improving efficiency means there's a lot of ground that the stock can make back here.
Lyft shares would have to appreciate 15% just to get back to what institutional investors were paying for the IPO, and after Tuesday, we'll know more about Lyft's performance. This will be Lyft's first time to entertain analysts at a quarterly earnings call, and it's also its first chance as a public company to discuss its outlook for the year ahead.
There isn't a lot of love for Lyft these days outside of the biased underwater underwriters that took it public earlier this year. A strong quarter can change that mind-set, just as a bad initial impression can cement its loser status. No pressure, Lyft. No pressure.