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Is LYFT Stock a Good Long-Term Investment in 2023?


The author Izabela Szkaradek of the article:" Is LYFT Stock a Good Long-Term Investment in 2023?".

Author: Izabela Szkaradek

Publication date: 06.11.2023




Lyft Overview

Lyft is a company based in the US that offers a variety of mobility services. Among them there are ride-hailing, bike sharing systems, rental cars, electric scooters, vehicle rentals, and food delivery.


Lyft offers a variety of mobility services

The company currently operates in the US and some cities in Canada. Actually, Lyft is the second-largest ride-sharing company in the US, with Uber being the largest.


Partners

The company has thousands of partners. In particular, Lyft collaborates with organizations to streamline business travel. The ride-hailing service offers flexible options for schedules and budgets to assist employees with their daily commutes. What’s more, Lyft arranges rides for important individuals within partner organizations. It also provides convenient transportation options for medical appointments, supporting healthcare. Lastly, Lyft offers reliable transportation solutions for partner events.


For example, among partner organizations we can find Mercedes Benz, Agero, Salesforce, AmeriHealth Caritas DC, AARP and many more.


Competitors

Lyft has several main competitors.

According to Lyft’s annual report for the fiscal year 2021, the company has several main competitors.

In the United States and Canada, Lyft faces significant competition with Uber and Via in the ridesharing industry. On the other hand, in the bike and scooter sharing sector, Lime and Bird are its major opponents. Meanwhile, within the consumer vehicle rental market, Lyft competes with Enterprise, Hertz, and Avis

Budget Group, as well as emerging car-sharing platforms.


Financial Performance

Lyft's revenue had been steadily increasing since 2018, but it took a hit in 2020 due to COVID-19. However, it began to grow again and in 2022, the total revenue reached $4095 million. So, this was a significant increase of 27.8% from the previous year.

The gross income also shows the impact of the pandemic as it grew and then suddenly dropped in 2020. Unfortunately, when it comes to net income, Lyft has not been performing well with the percentage always staying below zero. This indicates that the company is experiencing several losses.


Lyft income statement annually


Lyft Quarter Statement after Covid

Now let’s take a look at the quarter statement after the COVID-19 outbreak. We can see that the total revenue and gross profit have grown year by year when comparing the same quarter from the previous year. However, the net income has not been improving steadily and has shown several changes.



Lyft Quarter Statement after Covid

Lyft’s Riders

As we can see on the table below, in 2019 Lyft had the most riders it's ever had, with 22.9 million active users. However, in 2022 the number dropped to 20.3 million, indicating that the company was unable to reach its pre-COVID peak.


Lyft’s Riders

Hope For Better Future

In May Lyft fired 1072 employees, which is 26% of its workers at the time. The aim was to lower prices while increasing driver earnings. It was also driven by the necessity to provide additional rides with faster pickup times.


According to Dealroom estimates, Lyft's profit is expected to witness a significant increase. It was recorded at -1.585 billion in 2022 and is estimated to be around -40.2 million. While it is still a loss, it is significantly less than before.


Technical Analysis

LYFT hasn't been doing as well in the market because 74% of other stocks performed better than it over the past year. In fact, LYFT is included in the Ground Transportation industry, which has 38 stocks in total. Approximately 70% of these stocks are performing better than LYFT.


In the last month, LYFT's stock price has been bouncing around between $9.72 and $11.68. Right now, it's closer to the lower end of that range ($10.09 on 21.10.2023). Also, LYFT is traded quite a bit, with an average of 11 990 300 shares traded daily. This is a positive sign because it means the stock is easy to buy or sell.


Invest or not in Lyft stock?

LYFT's recent performance in the short term hasn't been great, however the long-term outlook looks more stable. Actually, Lyft has expressed its intention to achieve profitability in the future. The company is actively working on cost reduction and operational efficiency improvements. Despite these efforts, Lyft has also expressed its desire to continue growing in the market.


Reference List


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