Traditionally, the taxi service sector has lagged in innovation. However, Lyft (LYFT) is one of the small handful of companies in existance that can significantly alter this perception.
During its recent fourth quarter earnings call in February, Lyft, headquartered in San Francisco, emphasized ‘innovation’ nearly a dozen times, underscoring its dedication to offering new transportation options that appeal to American commuters and travelers.
This emphasis on innovation was a key highlight in a very positive Q4 report, helping Lyft shares become one of the standout momentum stocks this year. Specifically, Lyft’s stock is up more than 60% since its earnings report and about 150% from its record low in May 2023.
During the holiday quarter, Lyft delivered an adjusted net profit of $0.18 per share versus expectations of eight cents. This success was driven by a 10% rise in active riders, a 26% increase in ride volume, and reduced operating expenses, primarily from layoffs. With rival Uber also delivering strong Q4 results, the bullish sentiment around Lyft’s stock is showing no signs of slowing down.
LYFT is finally getting some buy ratings
RBC Capital upgraded Lyft’s stock rating from Sector Perform to Outperform on March 6 and established a Street high price target of $23.00. This upgrade was based on confidence in Lyft’s profitability for 2024 and confirmation of a stronger market position which may even expand into food delivery. The research firm also supports a potential merger between Lyft and DoorDash to bettantier compete against Uber.
Analysts at Argus Research similarly upgraded Lyft’s stock rating from Hold to Buy, in part due to the leadership of Lyft’s new CEO, David Risher. The research firm is bullish on the stock amid solid fundamentals in the ridesharing industry.
Lyft received its third buy rating of the month on March 15th, this time from Piper Sandler. This analyst is optimistic that Lyft will see benefits from a more robust U.S. consumer market and that the introduction of new products will lead to increased bookings.
Ride-hailing customers are getting more options
In recent months, Lyft has modernized the ride-hailing business model by giving customers greater flexibility when it comes to membership, booking, and the ride experience. Recent product launches include:
- Women+ Connect: A unique feature for women who prefer to ride or drive with another woman. Since going live in September 2023, the Christina Aguilera-backed product has resonated with female customers and drivers alike and is now available nationwide.
- Priority Pickup: An upgrade tailored to businesses that gives time-sensitive professionals a faster pickup service.
- Extra Comfort: A premium ride type introduced in October 2023 that lets riders opt for newer, roomier vehicles that offer more legroom, a quieter ride, and match known temperature preferences.
- On-time Pickup Promise: Launched in November 2023 as part of Lyft’s Scheduled Ride option, this gives customers up to $100 if their ride doesn’t arrive within 10 minutes of their pickup time. The guarantee helped boost scheduled airport rides by 37% during Thanksgiving week.
During the Q4 earnings call, CEO David Risher emphasized that “continuous innovation” is a central theme for 2024, aiming to provide compelling reasons for consumers to prefer Lyft over Uber. If the introduction of new products leads to enhanced financial outcomes as analysts anticipate, Lyft’s stock rally could extend significantly further.