Shares of Lyft (LYFT, Financial) experienced a significant drop, evidenced by a decline of 2.05% to $14.10. This movement occurred following the release of the company's Q4 earnings report. The initial stock reaction was largely influenced by investor concerns regarding the company's guidance for a slower growth rate in the upcoming quarter, which has heightened worries about competitive pressures in the ride-sharing market.
During Q4, Lyft (LYFT, Financial) reported gross bookings of $4.3 billion, which met its forecasted range of $4.28 billion to $4.35 billion, marking a 15% increase year-over-year. The latest figures also indicated a rise in active riders to 24.7 million by the end of Q4, a slight increase from the 24.4 million reported in the prior quarter. Moreover, the frequency of rides per active rider continued to show a positive trend.
Looking ahead, Lyft (LYFT, Financial) has projected bookings growth of only 10% to 15% for Q1 2025. This anticipated slowdown from Q4, and the previous year's 21% growth in Q1 2024, has added to the growing concerns among investors about the company's competitive standing in the rideshare industry.
A notable positive from Lyft's (LYFT, Financial) fourth-quarter results is the robust free cash flow, which hit a record $766 million in 2024. Additionally, Lyft announced its inaugural stock buyback program, authorizing $500 million for repurchase. This initiative represents approximately 9% of its outstanding shares at the current market price and signifies the management's confidence in the company's future cash flow prospects.
Examining Lyft's (LYFT, Financial) valuation, the stock's GF Value is estimated at $16.52, suggesting that it is currently "Modestly Undervalued". This valuation, available at GF Value, indicates that despite current market volatility, there may be potential for future gains. However, there are some warning signals investors should be aware of, including a severe Altman Z-Score indicating financial distress and faster asset growth than revenue growth, which could imply declining efficiency. Nonetheless, the Beneish M-Score suggests Lyft is unlikely to be a financial manipulator, and an expanding operating margin offers a glimpse of improving profitability.
With a market capitalization of $5.89 billion and a price-to-book ratio of 8.92, Lyft (LYFT, Financial) represents a speculative growth stock within the Technology sector. Investors considering this stock should weigh the company's financial health alongside its growth prospects and the macro trends in the rideshare market.
