Shares of Lyft ($LYFT) popped more than 3 percent Monday morning after an analyst upgrade cited higher prices as a path to profitability for the ride-hail company.
Guggenheim analysts Jake Fuller and Ali Faghri wrote in a research note that they now believe Lyft can be profitable by 2021 ー two years earlier than the firm previously predicted. Guggenheim upgraded the stock from "neutral" to "buy" and raised its price target to $60, about 20 percent higher than its Friday closing price.
"We all underestimated how quickly the competitive mindset might shift under public ownership and how much leverage there is in the model to pricing," Fuller and Faghri wrote.
Earlier this month, in its conference call with investors to announce second-quarter earnings, Lyft CFO Brian Roberts confirmed that the company was beginning to raise prices "on select routes and in select cities based on costs and demand elasticities," and noted that it was an industry-wide trend (read: Uber raising prices, too.)
Soon after Lyft went public in March, Guggenheim initiated coverage with a "neutral" rating, saying it was too soon to see how the company planned to make money:
"We see four paths to profitability: cut driver pay, turn off incentives, reduce insurance costs or shift to self-driving cars," Fuller wrote in April. "The first two would be tough in a highly competitive category, the third might not be enough by itself and the fourth is likely 10 years out."
Now the analysts indicated they believe price hikes are the key, so long as they don't hurt demand. But with Lyft's main competitor Uber ($UBER) burning through cash as it expands internationally and builds out its UberEats network, Guggenheim said it doesn't think it can afford to cut prices to try and take share from Lyft. And that could leave Lyft with an opportunity ー since it only operates in North America ー to become the first of the ride-hail startups to turn a profit. But it's a big if: the company still lost more than $600 million in its most recent quarter.
Astronauts will have to wait until next year before flying to the moon and another few years before landing on it. NASA on Tuesday announced the latest round of delays in its Artemis moon-landing program.
The Biden administration has enacted a new labor rule that aims to prevent the misclassification of workers as independent contractors. The labor department rule going into effect Tuesday replaces a scrapped Trump-era standard that lowered the bar for classifying employees as contractors
The KC-46 was to be the ideal candidate for a fixed-price development program. Instead, it has cost Boeing billions, and made industry wary of such deals.
Dave Long, CEO and Co-Founder of Orangetheory Fitness joins Cheddar to chat trends in the industry for 2024. He updates us on the company's plans to expand and what the state of the economy has meant for business.
One of the world's largest renewable energy developers will be getting hundreds of wind turbines from General Electric spinoff GE Vernova as part of a record equipment order and long-term service deal.
A moon landing attempt by a private US company appears doomed because of a fuel leak on the newly launched spacecraft. Astrobotic Technology managed to orient the lander toward the sun Monday so its solar panel could capture sunlight and charge its onboard battery.
Treasury Secretary Janet Yellen has announced that 100,000 businesses have signed up for a new database that collects ownership information intended to help unmask shell company owners. Yellen says the database will send the message that “the United States is not a haven for dirty money.”
A new version of the federal student aid application known as the FAFSA is available for the 2024-2025 school year, but only on a limited basis as the U.S. Department of Education works on a redesign meant to make it easier to apply.
