Please ensure Javascript is enabled for purposes of website accessibility

Why Lyft Stock Was Flying Higher Today

By Jeremy Bowman - May 7, 2020 at 10:48AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the No. 2 ridesharing company jumped on better-than-expected quarterly results.

What happened

Shares of Lyft (LYFT 2.65%) were surging today after the ride-hailing company posted better-than-expected results in the first quarter, showing significant improvement on the bottom line, and as management reassured investors that the company should be able to manage through the pandemic.

The stock was up 23.2% as of 10:41 a.m. EDT on Thursday.

A woman getting into a Lyft vehicle

A Lyft driver picks up a passenger. Image source: Lyft.

So what

Despite a sharp decline in rides starting in mid-March, Lyft's revenue rose 23% to $955.7 million, easily beating estimates at $897.9 million. Revenue per active rider rose 19% to $45.06, while active riders were up just 3% to 21.2 million as the company lost a pool of low-frequency riders who likely would have come in at the end of the month. 

More impressive was Lyft's strong improvement further down the income statement as its adjusted EBITDA loss narrowed from $216 million to $85.2 million, which was better than the company's own guidance before the pandemic for a loss of $140 million to $145 million. On the bottom line, Lyft reported an adjusted loss of $0.32 per share, much better than the consensus for a loss of $0.64 per share.

CEO Logan Green said: "While the COVID-19 pandemic poses a formidable challenge to our business, we are prepared to weather this crisis. We are responding to the pandemic with an aggressive cost reduction plan that will give us an even leaner expense structure and allow us to emerge stronger." 

Now what

Despite the better-than-expected numbers in the first quarter, Lyft is clearly being challenged by the pandemic. The company said that rides had fallen as much as 75% during the crisis and were still down by 70% in the most recent week. To cut costs, the company laid off about 17% of its employees last week, furloughed a few hundred others, and cut pay for the rest of its salaried employees. Those moves will help trim operating expenses by a run rate of $300 million this year, and Lyft is also slashing $250 million from capital expenditures.

CFO Brian Roberts said that with the help of those moves, its second-quarter adjusted EBITDA loss would be lower than $360 million, and that its improved cost structure meant that it can reach breakeven with 15% to 20% fewer rides than before. While those numbers show how the ridesharing company's business has seen a sharp drop during the crisis, investors still seemed impressed with the cost management. If the economy bounces back, Lyft should as well.


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

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lyft, Inc. Stock Quote
Lyft, Inc.
$19.40 (2.65%) $0.50

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/13/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.