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Why Is Lyft (LYFT) Down 4.5% Since Last Earnings Report?

A month has gone by since the last earnings report for Lyft (LYFT). Shares have lost about 4.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Lyft due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Earnings Beat at Lyft in Q3

Lyft’s third-quarter 2022 earnings (excluding $1.29 from non-recurring items) of 11 cents per share beat the Zacks Consensus Estimate of 8 cents and our estimate of 10 cents. In the year-ago period, Lyft reported earnings of 5 cents per share.  Total revenues of $1053.8 million lagged the Zacks Consensus Estimate of $1054.7 million and our estimate of $1,056.7 million. However, the top line jumped 21.91% year over year on a 7.2% increase in active riders, which totaled 20.31 million in the reported quarter.

Lyft's revenue per active rider increased 13.7% year over year in the September quarter to $51.88. Lyft’s adjusted EBITDA in the third quarter was $66.2 million, above our estimate of $58 million but lower than the year-ago figure of $67.3 million. Adjusted EBITDA margin for the third quarter was 6.3% compared with 7.8% in the year-ago period.

Total costs and expenses climbed 25.7% year over year to $1.34 billion in the quarter. Contribution improved 14.9% year over year to $590.4 million. Contribution margin decreased to 56% from 59.4% in the year-ago period. Lyft exited the third quarter with unrestricted cash, cash equivalents and short-term investments of $1.8 billion, flat sequentially.

Q4 Outlook

For the December quarter, management expects revenues in the band of $1.145-$1.165 billion. Management expects fourth-quarter revenues to grow 9-11% from the previous quarter’s reading and 18-20% from the year-ago reported figure. Adjusted EBITDA is expected in the $80-$100 million range. Adjusted EBITDA margin is anticipated in the 7-9% range.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -80.56% due to these changes.

VGM Scores

Currently, Lyft has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Lyft has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Lyft belongs to the Zacks Internet - Services industry. Another stock from the same industry, Alphabet (GOOGL), has gained 9.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.

Alphabet reported revenues of $57.27 billion in the last reported quarter, representing a year-over-year change of +6.8%. EPS of $1.06 for the same period compares with $1.40 a year ago.

Alphabet is expected to post earnings of $1.20 per share for the current quarter, representing a year-over-year change of -21.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.9%.

Alphabet has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.

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