Lyft Overperforms, But Investors Arent Impressed — Is Stock Salvageable?
On May 3, Lyft reported a profit of $ 875.6 million in the first quarter, up $ 609.0 million from the first quarter of 2021, up 44% from last year. However, the company's alarming second-quarter forecast of the need for additional executive incentives has led to a decline in share prices.
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Shares closed 2.3% on May 3 and fell 25.7% at pre-market auctions. Speaking to investors on the same day, CFO Lyle Elaine Paul said federal incentives and other epidemic dynamics have served as adversaries to protect managers.
"Together, these factors create rapid changes in supply and demand that make it difficult to achieve a healthy balance compared to a more typical environment," he said in a statement. “After leaving Omicron, we want to invest more in second quarter driver delivery to balance our market. This ensures that in the long run we will do our best to provide drivers and drivers with a better experience. We look forward to investing in key business initiatives to support our continued growth. "These investments will affect the leverage we can show in the second quarter."
Dan Ives, an analyst at Wedbush Securities, wrote in a note that although the company had a solid quarter, it quickly fared better with spending increases in the second quarter, likely by the end of the year.
"Investors were hoping that the cost of stimulating drivers was a thing of the past, but Lyft continues to invest in attracting more drivers to the platform as it expects demand to grow as work resumes," he wrote. “The downside is that Lyft spent money as a rock star in the 1980s. This will cause a strong negative reaction from investors in the already volatile market. “The patience in Lyft's name is running out. It won't work tomorrow morning. This will lead to an overload of actions ".
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However, Ives added that Wedbush believes it is "an overreaction because very little has changed in the main story".
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Lyft's cost guidance forced Wedbush to lower its target price from $ 50 to $ 32. Ives said Wedbush will continue to "hold our positive stance, we will be buyers after such an overwhelming reaction."
Wedbush kept the "excellent" rating.
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This article originally appeared on GOBankingRates.com. Lyft works better, but investors aren't impressed. Is it possible to hold shares?
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