Ride-sharing company Lyft (LYFT) made its stock market debut two weeks ago to much fanfare. Unfortunately, things haven’t gone as smoothly as many investors view its service — after a surge in the first day of trading, shares are down more than 20%. One major concern is timing: Lyft-competitor Uber is also expected to go public soon, with recently-released numbers giving investors (for the first time) a way to compare the two companies. And given the size of Uber, it isn’t boding well for Lyft right now.
The big thing for Lyft is being compared to big brother Uber. But even with Uber’s released S-1, Ives thinks “investors don't yet have a whole lot more clarity on some of the key comparable metrics.” For example, the analyst says, "Uber does not break out its metrics between the US and international beyond noting that 52% of bookings and 74% of rides come from outside the US,” while Lyft serves only Canada and the US. Ives also says, “Uber defines its rider metrics by combining both rideshare and Uber Eats riders so generating metrics like billings per ride, revenue per ride and profit per ride are not fully comparable."
Uber's ride-sharing take rate (revenue/gross bookings) at 22% is actually lower than Lyft’s 26%, which Ives says is “a figure many investors have been expecting to outperform Lyft's.” But in Uber’s case, gross bookings include tolls and surcharges (Lyft’s does not), which makes the take rate appear smaller. Furthermore, Uber’s number represents the global business, and is not differentiated by country. Ives says, “Uber did note that take rate ranged from 12% to 25% across regions and presumably the US has the highest, suggesting Uber's take rates are not as high as investors expected, and that Lyft has more limited upside in the near-term to take rate expansion than expected.”
Ives looks at other numbers too, but generally believes the metrics don’t match up well and, therefore, should not be used to compare the two rivals. Nevertheless, the analyst believes “there could be continued pressure on LYFT shares while investors wait for Uber's roadshow and dig further into the full financial metrics.” Ives also thinks, “there's plenty of work to do and time to go until investors start to feel like they are missing out on the ‘next Amazon’ although we believe Lyft remains in a strong position to capitalize on this fertile market opportunity.”
All in all, it’s still very early in the game for Lyft’s stock. The company was among the most well-known startups in the country, but its new status has investors looking for real returns. Though early, TipRanks analysis of seven analyst shows a Moderate Buy consensus, with three analysts Buying, three saying Hold and one recommending Sell. (See LYFT's price targets and analyst ratings on TipRanks)
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