LYFT – Market expectations are for a positive inflection in Uniform ROA, but management may be concerned about their product, investments, and margins

November 5, 2020

  • Lyft, Inc. (LYFT:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 23.4x Uniform P/E. At these levels, the market is pricing in expectations for Uniform ROA to inflect positively, but management may be concerned about their product, investment returns, and their margin expectations
  • Specifically, management may have concerns about employees’ renewed focus on safety and the sustainability of rideshare growth. In addition, they may lack confidence in their ability to encourage riders to return to their platform through innovative products and features, drive long-term growth and shareholder returns via investments, and continually support the Prop 22 campaign. Furthermore, they may be concerned about how long it will take to return to normalcy in the business. Moreover, management may be overstating their expectations to lead the industry in long-term margins, and they may have concerns about the required number of rides to achieve profitability. Finally, they may be concerned about the disparity of regional activity across the US