Lyft shares surge on hopes it will turn a profit this year
Lyft’s stock price soared Wednesday on hopes that the ride-hailing giant could finally become profitable once it recovers from its coronavirus-fueled downturn this year.
Shares in the Uber rival jumped about 11 percent to $59.40 in premarket trading after executives said there’s a chance the company could turn its first profit in the third quarter of 2021.
Lyft said profits were on the horizon partly because it slashed $360 million in fixed costs last year amid the COVID-19 crisis. The Silicon Valley firm also expects demand for rides to start bouncing back in the spring and summer as vaccines are rolled out.
“Obviously, pulling in profitability would require a strong summer rebound,” chief financial officer Brian Roberts said on a Tuesday conference call with investors. “However, the fact that this is now even a possibility in the Q3 time frame should increase investor confidence.”
Lyft’s business has gradually improved since its ridership plunged last spring amid nationwide lockdowns sparked by the coronavirus pandemic.
The San Francisco-based company raked in revenues of about $570 million from October through December, down 44 percent from the year-earlier period but up 14 percent from the July-to-September quarter.
Lyft’s cost-cutting measures — which included layoffs and lower costs for insurance and payroll processing — helped it post a smaller-than-expected adjusted quarterly loss of $150 million before interest, taxes and other items. Wall Street analysts were anticipating a $185 million loss for the quarter.
“Despite the difficult backdrop in 2020, we continued to focus on improving our business for the long-term,” Lyft CEO Logan Green said in a statement. “The progress we’ve made has been significant and I believe we are now in a stronger position than at any time in our past.”
Lyft still has a long way to go before its ridership returns to pre-pandemic levels. The company said it had about 12.5 million active riders in the October-to-December quarter, down 45 percent from nearly 23 million the prior year.
With Post wires