Lyft Remains A 'Show-Me' Story, Analysts Press For Execution

Core Insights - Lyft Inc. reported strong third-quarter results, highlighting improved execution and operational discipline [1] - J.P. Morgan raised Lyft's price forecast to $22 from $16 while maintaining a Neutral rating [1][7] - Lyft achieved over $1 billion in free cash flow for the first time, indicating effective cost control [1][4] Financial Performance - Lyft's third-quarter gross bookings increased by 16% year-over-year to $4.78 billion, nearing the high end of guidance [2] - Rides grew by 15%, driven by an 18% rise in active riders and double-digit growth in driver hours [2] - Adjusted EBITDA for the quarter reached $139 million, representing 2.9% of gross bookings, exceeding the mid-point of guidance [3] Future Guidance - For the fourth quarter, Lyft guided gross bookings between $5.01 billion and $5.13 billion, implying 17-20% year-on-year growth [3] - Fourth-quarter EBITDA is expected to range from $135 million to $155 million, with margins potentially expanding to 3% [4] - The company anticipates free cash flow conversion to reach 150-175% in 2026 and 2027 [4] Strategic Partnerships and Acquisitions - Lyft's management expects continued growth in 2026, supported by partnerships with United Airlines and Freenow, along with contributions from the TBR acquisition [2][5] - The Freenow acquisition is projected to add approximately EUR 1.0 billion to 2026 revenue [5] Autonomous Vehicle Strategy - Lyft's autonomous vehicle strategy focuses on building a hybrid partner ecosystem with companies like Waymo and May Mobility, expanding in the U.S. and Europe next year [6] - J.P. Morgan's updated estimates project 2026 revenue of $7.47 billion and adjusted EBITDA of $704 million [6] Valuation Metrics - The new price target of $22 reflects a valuation of about 4.5 times Lyft's projected 2027 free cash flow of $1.4 billion [7] - This target implies approximately 7.0 times the estimated 2027 EBITDA, which is a discount compared to industry peers trading at around 18 times [7] Stock Performance - Lyft shares were trading higher by 8.79% to $21.85 at the last check [8]