Lyft (LYFT) to Report Q2 Earnings: What's in the Cards?

Lyft LYFT, which went public on Mar 29, is scheduled to report its second-quarter 2019 results on Aug 7, after market close. The Zacks Consensus Estimate for the top and the bottom line stands at $809.35 million and loss of $1.03, respectively, in the to-be-reported quarter.

In the last reported quarter, Lyft’s first as a public company, it reported a wider-than-expected loss. The bottom line was hurt by higher expenses. Revenues, however, surpassed expectations as Active Riders (riders who take at least one ride during a quarter on Lyft’s multimodal platform through its app) increased 46% year over year to more than 20.5 million.

In fact, Lyft has performed disappointingly since its trading debut. The stock has shed 23.7% of its value compared with the 8.7% decline in its industry.

Given this backdrop, let’s delve into details to examine the factors likely to influence the company’s second-quarter 2019 results.

We expect operating expenses to be high in the to-be-reported quarter. This is because Lyft, like rival Uber Technologies UBER, is spending significantly on promotions and driver incentives in a bid to bolster market share in the ride hailing space. Elevated expenses are likely to be a drag on the bottom line.

We anticipate the major components of operating costs like research and development, sales and marketing, general and administrative to increase, thereby pushing up total costs and hurting the bottom line. Notably, demands from drivers apart from regulatory pressures from local governments are likely to significantly boost costs for ride-hailing companies like Lyft.

However, results in the to-be-reported quarter are likely to aided by an increase in Active Riders. Revenue per Active Rider is also likely to increase in the quarter. Lyft expects second-quarter 2019 revenues between $800 and $810 million. The mid-point of the guided range ($805 million) is below the Zacks Consensus Estimate for revenues.

Earnings Whispers

Our proven model does not show that Lyft is likely to beat estimates in the second quarter. This is because a stock needs to have both — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Lyft has an Earnings ESP of +6.41%.

Zacks Rank: Lyft’s Zacks Rank #4 acts as a spoiler and leaves surprise prediction inconclusive.

Stocks to Consider

Investors interested in the broader Computer and Technology sector may consider Woodward WWD and Zillow Group ZG as these stocks possess the right mix of elements to beat on earnings in the next releases.

Woodward has an Earnings ESP of +5.13% and a Zacks Rank of 3. The company will report third-quarter fiscal 2019 results on Aug 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zillow Group is a Zacks #3 Ranked company and has an Earnings ESP of +32.04%. The company will release second-quarter 2019 results on Aug 7.

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