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.
Orangetheory Fitness is redefining the future of workouts with smarter tech, strength-based programming, and community-driven studios built for what’s next.
Spain's government has fined Airbnb 64 million euros or $75 million for advertising unlicensed tourist rentals. The consumer rights ministry announced the fine on Monday. The ministry stated that many listings lacked proper license numbers or included incorrect information. The move is part of Spain's ongoing efforts to regulate short-term rental companies amid a housing affordability crisis especially in popular urban areas. The ministry ordered Airbnb in May to remove around 65,000 listings for similar violations. The government's consumer rights minister emphasized the impact on families struggling with housing. Airbnb said it plans to challenge the fine in court.
Roomba maker iRobot has filed for Chapter 11 bankruptcy protection, but says that it doesn’t expect any disruptions to devices as the more than 30-year-old company is taken private under a restructuring process. iRobot said that it is being acquired by Picea through a court-supervised process. Picea is the company's primary contract manufacturer. The Bedford, Massachusetts-based anticipates completing the prepackaged chapter 11 process by February.
Serbia’s prosecutor for organized crime has charged a government minister and three others with abuse of position and falsifying of documents related to a luxury real estate project linked to U.S. President Donald Trump’s son-in-law Jared Kushner. The charges came on Monday. The investigation centers on a controversy over a a bombed-out military complex in central Belgrade that was a protected cultural heritage zone but that is facing redevelopment as a luxury compound by a company linked to Kushner. The $500 million proposal to build a high-rise hotel, offices and shops at the site has met fierce opposition from experts at home and abroad. Selakovic and others allegedly illegally lifted the protection status for the site by falsifying documentation.
