Lyft (NASDAQ:LYFT)
Lyft (NASDAQ:LYFT) dropped by more than 20% on Friday after the company reported weak results for the first quarter.
According to Wedbush analyst Dan Ives’s report to clients, former management “essentially lost all Street credibility” after providing a disappointing 2023 forecast on the fourth quarter conference call. The company’s shift in leadership in April was supposed to signal a zeitenwende, but Ives says, “Not much has changed.”
Lyft stock has an uphill struggle that may be compared to climbing Mount Everest. It is still too soon to see any substantial improvements. Still, we will hopefully know swiftly by the end of the next quarter how the remainder of the year may pan out,” he said, noting that many people had hoped that the change in CEO could be a breath of fresh air. The firm plans to spend more on service enhancements to balance off the reduction in operating and personnel costs in the near future. We’re just in a holding pattern until we see Lyft make some moves to right the ship.
He is still neutral on the Lyft stock but has lowered his price objective from $13 to $11.
Tom White, an analyst at DA Davidson, told clients that new CEO David Risher has to show he can enhance operations before he can confidently recommend the company. After seeing the poor results from Q1, he reduced his EBITDA projections and price target from $12.50 to $9.75 while keeping a Hold rating.
The most overtly pessimistic view was taken by Bank of America, which maintained its Underperform rating but lowered its price objective for the company from $10 to $8.50. The analysts blamed post-pandemic competition from Uber Technologies for the company’s declining market share.
The bank’s analysts said, “Despite the more competitive pricing, Uber reported 40% US&C Mobility Trip growth in Q1.” At the same time, Lyft anticipates “ride growth of 15%+” in Q2. With competitive pricing and insurance challenges, it’s difficult to imagine a margin upside scenario in the near future. However, market share losses are leveling off.
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