Lyft (LYFT) to Post Q3 Earnings: Will Costs Mar Results?

Lyft LYFT, which went public on Mar 29, is scheduled to report third-quarter 2019 results on Oct 30, after market close.

Since trading debut, the company has successively incurred losses in the first two quarters of 2019. Let’s take a look at what awaits the company in third-quarter results.

Factors Likely at Play

Lyft is spending heavily on promotions and driver incentives as it competes with rivals like Uber Technologies UBER to increase its market share. Consequently, escalating sales and marketing expenses due to higher costs following greater use of targeted rider incentive programs are likely to get reflected in the company’s bottom line. Notably, management expects adjusted EBITDA loss of $190-$210 million in the soon-to-be-reported quarter.

However, the company’s top-line is expected to reflect significant growth in Active Riders (riders who take at least one ride during a quarter on Lyft’s multimodal platform through its app) as has been the case in the first two quarters of 2019. Evidently, the company expects revenues between $900 million and $915 million in the third quarter, indicating a 54-56% surge from the year-ago reported figure. Additionally, increased service fees and commissions among other factors are expected to have driven Revenue per Active Rider in the third quarter.

Earnings Whispers

Our proven model does not conclusively predict a beat for Lyft this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here as highlighted below.

Earnings ESP: Lyft has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at a loss of 71 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Lyft carries a Zacks Rank #3 but the 0.00% ESP makes surprise prediction difficult.

Highlights of Q2 Earnings

In the last reported quarter, the company delivered a positive earnings surprise of 34% with narrower-than-expected loss. Revenues also surpassed the Zacks Consensus Estimate and soared 72% year over year as well. Results were aided by 41% increase in Active Riders.

Stocks to Consider

Investors interested in the broader Computer and Technology sector may consider Pinterest, Inc. PINS and Zillow Group ZG as these stocks possess the right mix of elements to beat on earnings in the next releases.

Pinterest has an Earnings ESP of +20.00% and a Zacks Rank of 3. The company will report third-quarter 2019 earnings numbers on Oct 31. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zillow Group is a Zacks #3 Ranked company and has an Earnings ESP of +5.09%. The company will announce third-quarter financial results on Nov 7.

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