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.
Nvidia on Wednesday became the first public company to reach a market capitalization of $5 trillion. The ravenous appetite for the Silicon Valley company’s chips is the main reason that the company’s stock price has increased so rapidly since early 2023.
Chris Williamson, Chief Business Economist at S&P Global, breaks down September’s CPI print and inflation trends, explaining what it means for markets.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
