Ride-hailing company Lyft Inc. (LYFT) surged about 15% in after-hours trading on Wednesday as its first-quarter revenue beat market estimates despite the economic impact of the coronavirus pandemic.
Total revenue in the first quarter increased 23% to $955.7 million, which is well above the $884.7 million estimated by analysts. Its adjusted EBITDA loss narrowed to $85 million in the first three months of the year from $216 million year-on-year.
“While the COVID-19 pandemic poses a formidable challenge to our business, we are prepared to weather this crisis,” said Logan Green, co-founder and CEO of Lyft. “We are responding to the pandemic with an aggressive cost reduction plan that will give us an even leaner expense structure and allow us to emerge stronger.”
Active ridership base rose by 3% to 21,200, while revenue per active rider increased by 19% as stay-at-home orders tied to the coronavirus outbreak only came into effect towards the end of March.
Lyft, like its rival, Uber Technologies Inc. (UBER) has in recent weeks seen a steep decline in ride-sharing demand and transportation needs due to enforced lockdown orders. The San Francisco-based company last week announced plans to lay off 17% of its workforce to cut costs and adjust cashflows, while also withdrawing its full-year financial guidance.
As a result of the measures, Lyft said it expects to cut about $300 million from its annual expense run-rate by the fourth quarter of 2020, which will put the company on its “path to profitability”, it said. As of the end of March, the company had $2.7 billion of unrestricted cash, cash equivalents and short-term investments.
The majority of Wall Street analysts has a bullish stance on Lyft recommending to buy the stock but some have started to cut their price targets following its 40% year-to-date plunge.
On Monday, five-star analyst Youssef Squali at SunTrust Robinson maintained his Buy rating, while trimming his price target to $45, from $74, reflecting 72% upside potential from current levels.
“While we have very limited visibility into when and how demand ramps back up, we currently believe that this is largely a temporary drop in demand, with marginal demand destruction,” Squali wrote in a research note.
TipRanks data shows that 22 of 29 analysts have a Buy rating on the company’s shares and the remainder have a Hold adding up to a Strong Buy consensus rating. The $50.17 average price target implies a potential advance of 92% in the shares in the coming 12 months. (See Lyft stock analysis on TipRanks).
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