Why Lyft (LYFT) Stock Is Trading Up Today
What Happened?
Shares of ride sharing service Lyft (NASDAQ: LYFT) jumped 10.6% in the morning session after Tesla (NASDAQ:TSLA) announced plans for the launch of its Robotaxi service as early as 2025 in a move that could alter the ridehailing market for better or worse. Lyft's stock reaction suggests that the market sees some potential for the company to benefit.
Some Wall Street analysts weighed in on the development, with Jefferies' John Colantuoni adding, "We consider the event a best-case outcome for Uber (Lyft's competitor)."
Is now the time to buy Lyft? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Lyft’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. But moves this big are rare even for Lyft and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 8 months ago when the stock gained 37.7% on the news that the company reported fourth-quarter results indicating growing users, enabling it to beat Wall Street's revenue and EPS estimates. Rides growth accelerated for the fourth quarter in a row to 26% year on year in the quarter. Guidance for Q1 2024 came in ahead of expectations for gross bookings (from which the company generates revenue by taking a cut) and adjusted EBITDA, showing that both near-term growth and profits are better than expected.
Lastly, the company expects to generate positive free cash flow for the full year 2024, converting roughly half its forecasted full-year EBITDA into cash. This is a nice milestone.
Interestingly, the initial company release had a typo. Instead of guiding to a 50 basis point (0.5 percentage points) increase in 2024 adjusted EBITDA, the text stated 500 basis points (5 percentage points). This caused the stock to spike up 65% in after-hours trading before settling down. Holding aside the stock move caused by the typo, it was still a very good quarter, and the stock is currently reflecting this.
Lyft is down 0.3% since the beginning of the year, and at $13.77 per share, it is trading 32.1% below its 52-week high of $20.28 from March 2024. Investors who bought $1,000 worth of Lyft’s shares 5 years ago would now be looking at an investment worth $348.74.
When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we’ve found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback.
