Lyft stock jumps as much as 11% after ride-hailing firm said it could turn a profit by the end of the year
- The Lyft stock price jumped as much as 11% in early trading on Wednesday after its Q4 earnings.
- Cost-cutting and a potential profit caused investors to snap up shares in the ride-hailing app.
- Markets are warming to companies that stand to gain from a vaccine-driven rebound.
The Lyft stock price jumped as much as 11% in early trading on Wednesday before slipping back, after the ride-hailing app said it could be profitable by the end of the year if vaccines help people return to normality.
Lyft's revenue fell 44% year on year in the fourth quarter to $569.9 million, its earnings showed on Tuesday, with the COVID-19 pandemic continuing to batter its business model.
But analysts chose to see the light in the earnings, including the company saying it had exceeded its cost-cutting goals and that a "strong summer rebound" could lead to a profit later this year.
The Lyft stock price rose as much as 11% in early trading to $59.40. Yet it then slipped back and was up 4.59% at $56.20 by 10.50am ET.
Lyft's stock has risen around 90% since the start of October as investors bet that the arrival of vaccines will fuel a recovery among struggling firms. In pre-market trading on Wednesday, Lyft stock had risen as much as 13%.
After reporting $1.02 billion in revenues for the final quarter of 2019, Lyft's revenue declined to $955.7 million in the first quarter of 2020 and $339.3 million in the second quarter of last year. Lyft bounced back slightly with $499.7 million in revenue in the third quarter of 2020.
In the fourth quarter, ridership was still down 51% year on year. But CEO Logan Green told investors on Tuesday: "I believe we are now in a stronger position than at any time in the past, given the improvements we've made to our unit economics and our overall cost structure."
"We're like a tightly coiled spring positioned to drive strong organic growth and margin expansion as the recovery takes hold," he said. Logan added that the company expects to take advantage of "pent-up demand" among US consumers.
Ride-hailing companies like Lyft and Uber saw earnings plummet in 2020, as COVID-19 lockdowns curbed travel for most of the year. Yet their share prices have recovered sharply since tumbling in the spring of last year, thanks to optimism about coronavirus vaccines.
Uber stock was up 2.72% in morning trading to $61.23 ahead of its Q4 earnings release on Wednesday.