Should You Buy Lyft Stock Before Aug. 6?
Key Points
Lyft is growing, but it still faces harsh macro and competitive headwinds.
Its stock is a bargain at these levels, but investors should brace for more volatility.
- 10 stocks we like better than Lyft ›
Lyft (NASDAQ: LYFT), the second-largest ride-hailing service provider in North America, will post its second-quarter earnings report on Aug. 6. Should you buy its stock, which has declined nearly 20% this year, before it posts that report?
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What is Wall Street expecting?
Analysts expect Lyft's revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to rise 14% and 31% year over year, respectively, in the second quarter. For refrence, its revenue and adjusted EBITDA rose 14% and 25% year over year, respectively, in the first quarter.
That stable growth would indicate that Lyft is keeping pace with its larger rival, Uber (NYSE: UBER). Lyft served 28.3 million active riders in the first quarter, representing 17% growth from a year earlier and its sixth consecutive quarter of double-digit growth. Investors are likely expecting similar growth rates in the second quarter.
Lyft is keeping up with Uber by improving its customer experience, offering competitive prices, increasing its driver availability, adding new features, and expanding its Lyft Media platform for in-app and in-car ads. It's also expanding its autonomous vehicle tests through partnerships with Alphabet's Waymo and Baidu.
Lyft's stock was weighed down this year by concerns about weather disruptions and tougher competition, but it still looks like a bargain at less than seven times this year's adjusted EBITDA. I'd be willing to nibble on Lyft's stock before it posts its second-quarter earnings, but I wouldn't buy more shares until it posts its full earnings report.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Baidu, Lyft, and Uber Technologies. The Motley Fool has a disclosure policy.
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