Lyft investors cheered yesterday as the ride-hailing company unveiled bullish long-term projections at its Investor Day conference. This news sent Lyft shares up by more than 1%.
Lyft Projects Strong Growth in Coming Years:
Lyft’s rosy outlook forecasts a Compound Annual Growth Rate (CAGR) of 15% for gross bookings through 2027. This indicates a steady rise in the total value of rides booked on the platform over the next three years.
The company also expects its advertising business to experience explosive growth, anticipating an eightfold increase in revenue within the next three years. This suggests Lyft is placing a significant bet on advertising as a key revenue stream alongside ride-hailing services.
EBITDA Margin Poised for Improvement:
Lyft is aiming for an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) margin of around 4% by 2027. Achieving this target would signify a significant improvement in profitability for the company.
Despite Lyft’s ambitious growth plans, Wall Street analysts remain cautious. The prevailing consensus rating on LYFT stock is “Hold,” with analysts citing intense competition in the ride-sharing market, particularly from Uber (UBER), as a major concern. However, the average analyst price target of $18.98 suggests a potential upside of 21% for Lyft stock.
Conclusion:
While analysts remain cautious due to competition, Lyft’s long-term outlook has instilled optimism in investors. The company’s focus on expanding its advertising business and achieving profitability bodes well for its future. However, Lyft will need to navigate the competitive landscape effectively to fully capitalize on its ambitious plans.
