Lyft’s ride growth is encouraging, but valuation remains challenging – BTIG

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In their latest note on the company, the analysts highlight that Lyft’s previously announced price cuts – LYFT “cut prices early in the year and later announced a significant reduction in force to fund the effort” – appear to be paying off as latest checks are showing “a pick-up in rides with growth accelerating from low single-digits in March (+2%) to low double-digits in May-June (+12% in May, and +13% in the first week of June).”

They further believe the current trends are “supportive of LYFT’s 2Q revenue guide,” and estimate that continuous demand growth can even “yield upward pressure on our 2H revenue estimates.” For now, analysts maintain prior 2H revenue estimate, but note that “confidence in the outlook is improving.”

Nonetheless, despite the “encouraging” pick-up in ride volume, the analysts maintain that “valuation remains challenging,” at “7x 2024 Adjusted EBITDA, but GAAP EBITDA negative.” As such, they keep a Neutral rating on shares and see “a fair value range for LYFT of $7.50-11 using a 2024 EBITDA multiple range of 5-8x.”

Shares of LYFT closed at $10.45 yesterday, and are down over 6% YTD. By contrast, the company’s key rival Uber (NYSE:UBER) has gained nearly 65% since the start of the year.