Should Investors Be More Cautious on Lyft After Updated Q4 Guidance?

By Chris Lange Published Dec 2, 10:35AM EST

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Should Investors Be More Cautious on Lyft After Updated Q4 Guidance? — © Wikimedia Commons

Lyft Inc. (NASDAQ: LYFT | LYFT Price Prediction) has updated its fourth-quarter outlook in an SEC filing posted early on Wednesday. Its shares drifted higher in early trading.

The company’s outlook for the fourth quarter of 2020, discussed on the November 10 earnings call, implied an adjusted EBITDA loss of roughly $200 million at the midpoint and $190 million at the high end, based on sequential revenue growth of 11% to 15% relative to the third quarter.

In November, it said rideshare rides were down about 50% from last year, primarily due to rising COVID-19 case counts and the related impact on demand. Based on these recent trends and the reintroduction of restrictive measures designed to curtail the spread of COVID-19 in select cities, Lyft now expects sequential revenue growth will be at the lower end of the 11% to 15% range in the fourth quarter of 2020.

Lyft also now expects it can manage its adjusted EBITDA loss in the fourth quarter of 2020 to be better than $185 million. The firm attributes the improvement in its adjusted earnings before interest, taxes, depreciation and amortization outlook for the fourth quarter to contribution margin, which is expected to be at the top end of the previously provided range. Lyft also now anticipates further contribution margin expansion in 2021 on a sequential basis, versus the fourth quarter of 2020, even before a full recovery.

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Lyft’s revised outlook for the fourth quarter of 2020 assumes the operating environment does not materially deteriorate.

Looking ahead, the firm plans to release financial results for the fourth quarter in February 2021. So far, consensus estimates are calling for a net loss of $0.73 per share and $569.26 million in revenue for this quarter.

Lyft stock traded up about 4% at $41.18 Wednesday morning, in a 52-week range of $14.56 to $54.50. The consensus price target is $43.44.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.