Lyft (NASDAQ:LYFT) stock is trending on social media this morning, and its shares are tumbling about 18%. Yesterday after the market closed, the company reported weaker-than-expected third-quarter results.
Unlike Lyft’s archrival, Uber (NYSE:UBER), which rallied after its earnings, Lyft’s ridership does not seem to be booming amid greatly reduced fears about the coronavirus. Making matters worse for Lyft, the company appears to be continuing to lose market share to Uber.
On the other hand, at least one analyst is defending LYFT stock on weakness this morning.
Lyft’s Q3 Earnings and Likely Market Share Losses
Lyft reported net income, excluding some items, of $36.7 million. However, it used $204 million of net cash in its operating activities, versus the $75.5 million of cash that it utilized in operating activities during the same period a year earlier. The ridesharing company’s top line jumped 21.5% year over year (YOY) to $1.05 billion, representing its lowest sales increase in over 12 months. Meanwhile, its “total costs and expenses” rose to $1.34 billion from $1.07 billion in Q3 of 2021.
Lyft’s active rider count climbed 7.2% YOY to over 20 million. That was “the slowest [increase] this year and a million below market expectations,” Reuters reported. Last quarter, however, Uber’s monthly active platform consumers soared 14% YOY to 124 million. Uber’s much higher growth rate suggests that it’s taking additional market share from Lyft.
Uber’s market share is likely to increase “slightly” at Lyft’s expense over the next several years, Morningstar analyst Ali Mogharabi predicted.
UBS’ Lloyd Walmsley slashed his price target on LYFT stock to $12 from $16, calling Lyft’s active rider gain “disappointing” and lamenting the company’s higher-than-expected insurance costs. He kept a “neutral” rating on the shares.
However, Wedbush’s Daniel Ives wrote that the company’s Q4 outlook was mostly in accordance with analysts’ average estimates, and he suggested that Lyft is effectively coping with its macro challenges. Ives cut his price target on the name to $17 from $25 but maintained an “outperform” rating on the shares.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.