Lyft shares jump after emerging from strongest week since closings began

A sign marks a meeting place for Lyft and Uber riders at San Diego State University in San Diego, California, on May 13, 2020.

Mike Blake | Reuters

Lyft shares rose as much as 11% on Wednesday, as investors rallied around the company after it said it is experiencing an earlier than expected rideshare rally.

Lyft’s rally also brought optimism to Uber shares, which rose as much as 5.8% on Tuesday on an otherwise weak day for tech stocks. It comes despite cautious comments from CEO Dara Khosrowshahi at the Morgan Stanley Tech conference on Monday, saying he expects his mobility business to see some signs of recovery in the United States and Europe, although it is “too early to tell.”

Lyft now expects to manage its first-quarter adjusted EBITDA loss to $ 135 million, from the $ 145 million to $ 150 million it previously forecast, according to a Tuesday filing with the SEC. The company also said that the last week of February was its best week in terms of volume since the pandemic closures began in March 2020, and it expects the recovery to continue this month.

The company’s growing recovery comes as more states are beginning to lift Covid-19 restrictions and vaccines continue to roll out across the country.

“We believe LYFT is poised to show an inflection towards positive growth year-over-year beginning the week of March 21, which we believe will accelerate in the summer months, barring any setbacks with vaccine launch. upside, especially given the still uncertain outlook of the pandemic and weather issues in certain regions, “according to CFRA analysts on Wednesday.

Truist analysts said Tuesday that the company’s update on business trends gives the firm “growing confidence that business trends should continue to improve as local governments ease restrictions on social activities and people. I went back to work with the C-19 gradually tapering off. “

“We believe that further easing of restrictions, particularly in Texas, which has fully reopened, could accelerate the improvement in year-over-year trends during the spring,” they added.

Uber and Lyft have still remained optimistic that they will be profitable by the end of this year on an adjusted EBITDA basis.

“At this point, LYFT is seeing encouraging demand signals and has been able to handle this demand while guiding towards better profitability and showing strong execution,” Needham analysts wrote in a note to clients on Wednesday.

– CNBC’s Michael Bloom contributed reporting.

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