Why LYFT Inc (NASDAQ: LYFT) stock is under pressure

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LYFT Inc (NASDAQ: LYFT) stock lost over 4.8% in the pre-market session of Feb 12th, 2020 (Source: Google finance) post the fourth quarter of FY 19. The company failed to change its target to achieve profitability on an adjusted basis by the end of 2021. Further, the company forecast slower revenue growth in the new year and the company refused to match larger rival Uber, which has recently moved up a key profit target by a year. LYFT’s active rider customer base in the fourth quarter increased to 22.9 million from 22.3 million the previous quarter. That compares with Uber’s global 111 million active platform users in the same period. While Lyft’s ridership rose by more than 6% in the first half of 2019, the growth in the second half slowed to about 2.5%. Lyft has reported fourth-quarter losses of $356 million.

LYFT in the fourth quarter of FY 19 has reported the adjusted loss per share of $1.19, beating the analysts’ estimates for the adjusted loss per share of $1.38 cents. The company had reported the adjusted revenue of $1.02 billion in the fourth quarter of FY 19, beating the $984 million, according to IBES data from Refinitiv

The company expects an adjusted EBITDA loss to be in the range of $450 million and $490 million for all of 2020. Lyft also forecasted that it would produce revenue in the range of $1.055 billion to $1.06 billion in the first quarter of this year, and sales expected to be in the range of $4.58 billion to $4.65 billion for the full year. Analysts on average were projecting revenue to be of $1.047 billion in the first quarter and $4.6 billion for the full year, according to FactSet.

Additionally, the company has very recently acquired rental-car partner Flexdrive which allows Lyft drivers to rent cars from partners and use them to drive on the network, for $20 million along with the assumption of debt and lease obligations.

Meanwhile, Lyft in January had cut 2% of its workforce in its sales and marketing department to achieve its profitability target, but intends to hire more people this year. The company is still spending heavily, with total costs in 2019 growing to $6.3 billion. The company was committed to its “low-cost culture” with employees, including executives and board members, flying in coach class.

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