Why Is Lyft (LYFT) Down 22.1% Since Last Earnings Report?

It has been about a month since the last earnings report for Lyft (LYFT). Shares have lost about 22.1% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Lyft Beats on Revenues in Q3

Lyft reported third-quarter 2021 earnings (excluding 26 cents from non-recurring items) of 5 cents per share against the Zacks Consensus Estimate of a loss of 3 cents. In the year-ago period, the company had incurred a loss of 90 cents per share amid significant decline in ride volumes induced by coronavirus-led woes.

Total revenues of $864.4 million outperformed the Zacks Consensus Estimate of $860.2 million and also surged approximately 73% year over year. The top line benefited from 51.4% jump in Active Riders (riders who take at least one ride during a quarter on Lyft’s multimodal platform through its app), which totaled 18.94 million in the reported quarter. This San Francisco-based company’s Revenue per Active Rider increased 14.2% year over year to $45.63.

Lyft’s third-quarter performance improved sequentially as well, reflecting continued recovery in rideshare rides. Total revenues increased 13% from the second quarter of 2021 with 10.5% rise in Active Riders.

Lyft’s adjusted EBITDA in the third quarter was $67.3 million, an improvement of $307 million year over year and $43.5 million sequentially. This marks the company’s second straight quarter of generating adjusted EBITDA profits. Adjusted EBITDA margin for the third quarter was 7.8% against adjusted EBITDA loss margin of 48% in the year-ago period. In the second quarter of 2021, adjusted EBITDA margin was 3.1%.

Total costs and expenses climbed 9.3% year over year to $1.04 billion in the quarter. Contribution improved more than 100% year over year to $513.6 million. Contribution margin increased to 59.4% from 49.8% in the year-ago period. Lyftexited the third quarter with unrestricted cash, cash equivalents and short-term investments of $2.4 billion compared with $2.25 billion at the end of 2020.

Q4 Outlook

For fourth-quarter 2021, Lyft expects adjusted EBITDA of $70 million-$75 million. Revenues are expected between $930 million and $940 million in the same period.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

Currently, Lyft has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

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

Outlook

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

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