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Lyft (LYFT) Stock Is Hot, Here’s Why
Lyft (LYFT) Stock Is Hot, Here’s Why
What happened:
Shares of ride-sharing service Lyft (NASDAQ: LYFT) jumped 9.3% in morning trading after the company provided promising financial updates during the 2024 Investor Day session. gross reserves will increase at an annual growth rate of approximately 15% between FY 2024 and FY 2027. 2.) Adjusted EBITDA margin (measured as a percentage of gross reserves) has been set at approximately 4% in a on an annual basis in 2027 3.) Free cash flow conversion (measured as a percentage of adjusted EBITDA) is expected to exceed 90% annually between 2025 and 2027. Projections highlighted a focus on achieving a healthy balance between growth and profitability, which the market will probably applaud.
The announcement came on the heels of strong Q1 ’24 earnings results, with revenue exceeding analyst expectations and gross bookings and the number of trips taken exceeding. Additionally, the company reaffirmed its Q2 2024 and full-year 2024 guidance provided during the Q1 2024 earnings call. After the initial pop, shares cooled to $16.24, an increase 4.4% compared to the previous closing.
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What the market is telling us:
Lyft shares are very volatile and in the last year have seen 46 moves greater than 5%. In this context, today’s change indicates that the market considers this news to be significant, but not something that would fundamentally change its perception of the business.
The previous big move we wrote about occurred 29 days ago, when shares rose 9.4% on news that the company reported first-quarter results that beat analysts’ revenue expectations, as its gross bookings and the number of trips made exceeded. Its EPS and free cash flow surpassed Wall Street estimates – this was the second consecutive quarter of positive free cash flow, which is encouraging given its unprofitable track record. Zooming out, we think this was an impressive quarter that should delight shareholders.
Lyft is up 17.6% since the start of the year, but at $16.24 per share it is still trading 19.9% below its 52-week high of $20.28 in March 2024. Investors who bought $1,000 worth of Lyft stock 5 years ago they would now be looking at an investment of $263.43.
When a company has more money than it knows what to do with, buying back its own shares can make a lot of sense – as long as the price is right. Luckily, we found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Free Special Report on the growth story of a fallen angel who is already recovering from a setback.