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LYFT Gains on Upbeat February Ride Volumes & Improved Q1 View

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Lyft, Inc. LYFT provided a bullish update on its February ride trends and improved its adjusted EBITDA loss forecast for the first quarter of 2021. This drove shares of the company 4.3% higher in after-market trading on Mar 2.

In a SEC filing, dated Mar 2, the company revealed that average daily rideshare rides increased 4% month over month in February despite ride volumes in the week ending Feb 21, being impacted by severe winter storms. Excluding this weather-related impact for the week ending Feb 21, average daily rideshare ride volume increased 5.4% from that in January. On a further positive note, the week ending Feb 28 recorded the highest volume of rideshare rides since March 2020.

The company stated that, “Using actual rideshare ride volume for January and February and applying February’s average daily rideshare ride volume to the 31 days in March implies first quarter rideshare ride volume would be down 1.2% quarter-on-quarter.” This is better than its previous forecast during the fourth-quarter conference call when it stated that first-quarter rideshare rides might decline 4% sequentially by applying ”January’s average daily rideshare ride volume to the 90 days in the first quarter”.

Lyft, Inc. Price

Lyft, Inc. Price
Lyft, Inc. Price

Lyft, Inc. price | Lyft, Inc. Quote

Nevertheless, Lyft continues to expect first-quarter average daily rideshare ride volumes to rise sequentially. Further, the company anticipates rideshare ride volume to reflect year-over-year growth starting from the week ending Mar 21, 2021. The company expects the growth to continue throughout the year, provided COVID-19 conditions do not worsen.

However, due to the prevalent pandemic, Lyft estimates first-quarter rideshare rides to be either flat or decline slightly from the fourth quarter of 2020. The downside is because the first quarter of 2021 has two fewer days compared to the fourth quarter of 2020.

Additionally, the company estimates adjusted EBITDA loss to be $135 million in the first quarter, better than its previous outlook in the range of $145 million-$150 million. The improved outlook is owing to its cost-control measures and the expectation of contribution margin at the top end of 51-51.5%.

Zacks Rank & Key Picks

Lyft carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Internet - Services space are Etsy, Inc. ETSY, Shopify Inc. SHOP and Facebook, Inc. FB. While Shopify sports a Zacks Rank #1 (Strong Buy), Etsy and Facebook carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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