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.
Joe Cecela, Dream Exchange CEO, explains how they are aiming to form the first minority-controlled company to operate an exchange in U.S. history. Watch!
A Michigan judge is putting sponges in the hands of shoplifters and ordering them to wash cars in a Walmart parking lot when spring weather arrives. Genesee County Judge Jeffrey Clothier hopes the unusual form of community service discourages people from stealing from Walmart. The judge also wants to reward shoppers with free car washes. Clothier says he began ordering “Walmart wash” sentences this week for shoplifting at the store in Grand Blanc Township. He believes 75 to 100 people eventually will be ordered to wash cars this spring. Clothier says he will be washing cars alongside them when the time comes.
The State Department had been in talks with Elon Musk’s Tesla company to buy armored electric vehicles, but the plans have been put on hold by the Trump administration after reports emerged about a potential $400 million purchase. A State Department spokesperson said the electric car company owned by Musk was the only one that expressed interest back in May 2024. The deal with Tesla was only in its planning phases but it was forecast to be the largest contract of the year. It shows how some of his wealth has come and was still expected to come from taxpayers.
At 100 years old, the Goodyear Blimp is an ageless star in the sky. The 246-foot-long airship will be in the background of the Daytona 500 — flying roughly 1,500 feet above Daytona International Speedway, actually — to celebrate its greatest anniversary tour. Even though remote camera technologies are improving regularly and changing the landscape of aerial footage, the blimp continues to carve out a niche. At Daytona, with the usual 40-car field racing around a 2½-mile superspeedway, views from the blimp aptly provide the scope of the event.
You'll just have to wait for interest rates (and prices) to go down. Plus, this deal's a steel, the big carmaker wedding is off, and bribery is back, baby!
