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.
Swedish buy now, pay later company Klarna is making its highly anticipated public debut on the New York Stock Exchange Wednesday, the latest in a run of high-profile initial public offerings this year. The offering priced at $40 Tuesday, above the forecasted range of $35 to $37 a share, valuing the company at more than $15 billion. The valuation easily makes Klarna one of the biggest IPOs so far in 2025, which has been one of the busier years for companies going public. Other popular IPOs so far this year include the design software company Figma and Circle Internet Group, which issues the USDC stablecoin..
Oracle co-founder Larry Ellison wrested the title of the world’s richest man from longtime holder Elon Musk early Wednesday as stock in his software giant rocketed more than a third in a stunning few minutes of trading. That is according to wealth tracker Bloomberg. A college dropout, the 81-year-old Ellison is now worth $393 billion, Bloomberg says, several billion more than Musk, who had been the world’s richest for four years. The switch in the ranking came after a blockbuster earnings report from Oracle. Forbes still has Musk as the richest, however, valuing his private businesses much higher.
Aurimas Sabulis, CEO of Dextall, unveils how AI‑driven prefabricated façades slash design time by 80%, labor by 87%, and accelerate affordable housing delivery.
Online broker Robinhood Markets will join the S&P 500 index Online broker Robinhood Markets will join the S&P 500 index as its stock rides higher on a cryptocurrency wave.
