Why Lyft Shares Surged 18% in November

What happened

Shares of Lyft (NASDAQ: LYFT) were moving higher last month as the ridesharing specialist benefited from a new alliance with a rival and some analyst upgrades. The upswing also came after the stock posted better-than-expected results in its third-quarter earnings report at the end of October. 

According to data from S&P Global Market Intelligence, the stock finished the month up 18%. As you can see from the chart below, those gains mostly came in the second half of the month. 

LYFT Chart

LYFT data by YCharts.

So what

The ride-hailing operator started the month out strong, gaining 3.7% on Nov. 1 as it recouped some of its losses from the day before as the stock sold off in spite of a strong earnings report. The stock may have gotten a boost from Goldman Sachs upgrading it to a buy, noting that the company was gaining market share and developing operational efficiencies. 

A rider and passenger in a Lyft vehicle.

Image source: Lyft.

The stock dipped briefly after rival Uber turned in its earnings report on Nov. 4, but recovered those losses. Then the stock began to climb on Nov. 18 when Juno, a New York ridesharing service owned by Gett, said it would shut down.

At the same time, Gett also announced a partnership with Lyft that should help boost ridership. Gett will refer its business customers to Lyft when traveling in the U.S. and it invited Juno customers to join Lyft.

The stock's gains continued as Lyft got a bullish note from JMP, and an upgrade to a buy from Loop Capital Markets as analyst Jeffrey Kauffman said, "The U.S. rides business is showing competitive rationality, allowing Lyft's share gain and margin expansion to continue." 

Now what

Despite Lyft's bounce last month, the stock is still down a third from its March IPO  price, and remains deeply unprofitable, though it recently said it was on track to achieve profitability on an adjusted EBITDA basis in two years. Still, the analyst upgrades show that the stock is beginning to gain traction with Wall Street, and that it is clearly demonstrating progress in its quarterly reports.

The company will have to continue posting strong top-line growth and move toward profitability to lift the stock, but thus far Lyft's execution has been nearly flawless.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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