Investors will wonder if Lyft (LYFT) will collapse the rideshare company’s stock price fell to $10.12 on 3 March 2023.
Conversely, value hunters will wonder if Lyft Inc. (NASDAQ: LYFT) is now a bargain. Lyft could be a bargain because its revenue is growing.
For example, Lyft’s quarterly revenues grew from $569 million in the fourth quarter of 2020 to $969 in the fourth quarter of 2021 and $1.175 billion in the fourth quarter of 2022. Business of Apps estimates Lyft’s revenues grew by 27.8% between the fourth quarter of 2021 and the fourth quarter of 2022.
Lyft is a growing company
Moreover, Lyft’s customer base is growing. Business of Apps estimates the number of active Lyft riders grew by 8.5% to 20.3 million between the fourth quarter 2021 and the fourth quarter of 2022.
The number of active Lyft riders grew from 12.5 million in the fourth quarter of 2022 to 18.7 million in the fourth quarter of 2021, Business of Apps calculates. However, Lyft has not recovered from the COVID-19 epidemic. Lyft’s active rider numbers have not returned to the 2019 high of 22.9 million.
The typical Lyft (LYFT) customer generates $57.72 in revenue a year, Business of Apps estimates. Lyft’s average revenue per customer grew from $44.440 in 2019, $45.40 in 2020, and $51.79 in 2021.
Moreover, Lyft’s US market share is growing. Lyft’s US market share grew from 30% in July 2020 to 31% in July 2022, Statista estimates. Lyft was operating in 644 US cities and 12 Canadian cities in 2022. Unlike Uber (UBER), Lyft does not operate the United States.
Is Lyft Making Money?
Hence, the number of Lyft (LYFT) riders is rising, and the company is generating more revenue from those riders. But does Lyft make money?
Frighteningly, the only financial numbers Lyft reported on 31 December 2022 were $1.2 billion in quarterly revenues, a -$588 million net common loss, and a 23.72% quarterly revenue growth rate.
In contrast, Lyft reported a $483.12 million quarterly gross profit on 30 September 2022. The quarterly gross profit grew from $472 million on 30 September 2021.
Conversely, Lyft reported six straight quarterly operating losses on 30 September 2022. For example, Lyft reported a quarterly operating loss of -$290.38 million on 30 September 2022. The quarterly operating loss fell from -$373.18 million on 30 June 2022 and rose from -$205.04 million on 30 September 2021.
How much Cash does Lyft Generate?
Thus, Lyft (LYFT) loses money as its revenues grow, but does it generate cash?
No, Lyft burns cash. For example, it reported a “quarterly operating cash flow” of -$30.07 million on 31 December 2022. The quarterly operating cash flow fell from -$12.43 million on 31 December 2021. Tellingly, Lyft reported four straight quarters of negative operating cash flow in 2022.
In contrast, Lyft reported no quarterly ending cash flow on 31 December 2022. The last quarterly ending cash flow was -$30.73 million on 30 September 2022. Lyft reported a $282.68 million quarterly ending cash flow on 31 March 2022. The quarterly ending cash flow rose from -$341.24 million on 31 December 2021.
Lyft is paying debts. It reported a -$24.12 million quarterly financing cash flow on 31 December 2022. Yet Lyft’s total debt grew from $779.17 million on 31 December 2021 to $1.026 billion on 31 December 2022.
Less Cash and More Debt at Lyft
Meanwhile, Lyft’s cash and short-term investments fell from $2.253 billion on 31 December 2021 to $1.797 billion on 31 December 2022. Hence, Lyft (LYFT) finished 2022 with less cash and more debt, though its revenues are growing.
Meanwhile, Lyft has less value. For example, the total assets fell from $4.774 billion on 31 December 2021 to $4.556 billion on 31 December 2022.
Thus, Lyft is losing value and cash as its debts grow. Hence, I think the $9.88 Mr. Market paid for Lyft on 1 March 2023 is justified.
Thus, Lyft could be a bargain for investors who can afford to lose money. To explain, Lyft is a growing company with growing revenues at a cheap price. I think Lyft could become a permanent cash generator.
Who will Buy Lyft?
My prediction is somebody will acquire Lyft because it has a growing rideshare ecosystem. I think the most probable buyers for Lyft are automakers such as Tesla (TSLA) and Ford (F). These companies are cash rich and have an interest in rideshare.
For example, Tesla Motors (TLSA) had $22.185 billion in cash and short-term investments on 31 December 2022. Similarly, Ford Motor Company (F) had $44.07 billion in cash and short-term investments on 31 December 2022.
One reason an automaker will buy Lyft is to provide a new market for its vehicles. To explain, Ford or Tesla could lease a car or van to a Lyft driver and take a percentage of the drivers’ earnings for the payments. Cynics will call this debt peonage, but it could be a profitable business.
Another fascinating potential buyer for Lyft (LYFT) is Alphabet (GOOGL) autonomous vehicle subsidiary Waymo. Waymo is experimenting with self-driving rideshare through its Waymo One subsidiary.
A company that will not buy Lyft (LYFT) is Uber (UBER). To explain, Statista estimates Uber had 69% of the US rideshare market in July 2021. Were Uber to buy Lyft (which had 31% of the US rideshare market) it could control 100% of the rideshare market and have a monopoly. That will attract the attention of the Federal Trade Commission (FTC) triggering an antitrust lawsuit Uber could lose.
Thus, I think Uber management wants to keep Lyft in business. I think Lyft (LYFT) can survive, but not as an independent company.
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