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Lyft Q3 earnings: what’s the outlook and can it catch up with Uber?

Lyft’s Q3 earnings might represent an improvement over Q2, but the ride-hailing firm continues to struggle, even as shares in its rival Uber continue to rise.

When does Lyft report earnings?

Lyft reports earnings on 10 November.

Lyft earnings – what to expect?

Revenue is expected to almost halve for the quarter, to $486 million, although headline earnings per share (EPS) are forecast to have risen 14.7% to -$1.34.

Ride volumes continue to be weak as the impact of Covid-19 causes people to stay at home, although the shift away from public transport has helped to offset this to some degree. Both the number of active riders and the revenue per active riser are expected to fall compared to a year earlier, although some pickup in volume compared to quarter two (Q2) is expected.

For Lyft, and its rival Uber, the US election also saw the passage of Proposition 22, which helps to remove one cloud over the stock. The two companies can classify drivers as contractors and not employees. This reduces the costs of employing drivers and will help improve margins.

How to trade Lyft’s earnings

Of 39 analysts covering Lyft, 24 have ‘buy’ recommendations, with fourteen ‘holds’ and just one ‘sell’. The current average target price is $40.39, 35% upside to the current price of $29.87.

Lyft stock price – technical analysis

Lyft continues in a long-term downtrend from its initial public offering (IPO) price. From a March low of $15.00, the price rallied right back to the 200-day simple moving average (SMA), but this lower high merely provided an excellent opportunity for sellers to pile back in again.

Recent price action has seen the stock rally off its October lows, edging back above the 50- ($27.49) and 100-day SMAs ($29.87), but edging back after once again touching the 200-day SMA ($31.49). Rallies to $32.00 have faltered since August, so a turn lower from here will reinforce the ongoing bearish view.

Lyft vs Uber

While Lyft’s stock has continued to struggle, Uber has gone from strength to strength. Uber has the edge in size over Lyft, but its margins are weaker and Lyft has outpaced it in revenue growth of late. As economies recover from Covid-19, the race will be on to see who can grab more market share.

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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