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Why Lyft Stock Was Falling Today

By Jeremy Bowman – Feb 12, 2020 at 12:22PM

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Strong fourth-quarter results weren't enough to impress investors.

What happened

Shares of Lyft (LYFT 6.56%) were moving in reverse today after better-than-expected results weren't enough to keep the stock's momentum going from earlier in the week. A number of factors seemed to weigh on the stock today, including a middling outlook for 2020, a failure to match Uber in its profitability guidance, and the fact that the stock had already delivered significant gains this year.

Shares were down 8.9% as of 11:03 a.m. EDT, after falling as much as 10% earlier in the session.

Two women in the front of a Lyft car

Image source: Lyft.

So what

Lyft's fourth-quarter numbers were strong: Revenue rose 52% to $1.02 billion, driven by 23% growth in active riders and 23% growth in revenue per active rider. That result was well ahead of analyst estimates at $984 million. 

The ride-hailing company also scaled back on marketing expenses by 14%, which helped trim its adjusted EBITDA loss from $251.1 million to $130.7 million. On the bottom line, it posted an adjusted loss per share of $0.41, which beat expectations at $1.39. 

CEO Logan Green summed up its IPO year like this: "Fiscal 2019 was an exceptional year across the board. We significantly improved our path to profitability while simultaneously reaching critical milestones toward our long-term strategy. Continued strength in core rideshare drove our industry-leading growth, led by product innovation and operational excellence on every facet of our robust transportation platform." 

Lyft stock has a pattern of falling after its earnings report despite posting strong numbers. That may be because the company is still unprofitable and trades at a high valuation, meaning lofty expectations are baked in. This time around, rival Uber had just moved up its target for adjusted EBITDA profitability from the end of 2021 to the end of 2020. Lyft, however, declined to follow suit, leaving its profitability target at the end of 2021, which may have disappointed some investors.

Lyft stock had also gained following the Uber report and was up 25% year to date before last night's report, so today's losses simply wiped out the gains that came after Uber's results.

Now what

Looking ahead, the company expects revenue growth to decelerate significantly in 2020, calling for 36%-37% growth in the first quarter and 27%-29% for the full year. Lyft's guidance has historically been conservative, but if it's accurate, investors are looking at a stock that's losing money with rapidly slowing growth and a much larger rival in Uber. Today, that seems like a hard sell for investors.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Lyft, Inc. Stock Quote
Lyft, Inc.
LYFT
$13.80 (6.56%) $0.85
Uber Technologies, Inc. Stock Quote
Uber Technologies, Inc.
UBER
$29.19 (9.24%) $2.47

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