LYFT - Lyft says its gross bookings will grow 15% annually through 2027

2024-06-06 10:31:14 ET

Lyft Inc (NASDAQ: LYFT) opened about 10% this morning after revealing financial targets for 2027 at its first investor day.

What Lyft expects to achieve by 2027

The ride-hailing company now expects its gross bookings to grow some 15% annually through 2027.

Gross bookings from its budding ads business will grow up to eight-fold over the same period, as per Zach Greenberger – the executive vice president of Lyft’s Partnership Ecosystem.

He forecasts the firm’s advertising business to see $400 million of gross bookings in 2027 as “advertisers are looking for more targeted and measurable solutions. Expectations for this year, in comparison, are currently at $50 million only.

Wall Street currently has a consensus “hold” rating on Lyft stock that’s up roughly 40% versus its year-to-date low at writing.

ads business is doing well

Lyft Inc reported a whopping 250% growth last month in its quarterly revenue from the advertising business that it launched in 2022.

On Thursday, the Nasdaq listed firm committed to an adjusted core profit margin of some 4.0% for 2027 as well. David Risher – its chief executive said in a press release today:

Lyft’s customer-obsessed strategy is working. Our execution keeps getting better, we’re delivering industry-leading innovation, and we’re working closely with partners to create great customer experiences.

Note that ended last year (2023) with a 14% increase in gross bookings and core profit margin at 1.6%. Lyft stock does not pay a dividend at writing.

Wells Fargo rates Lyft stock at ‘equal weight’

Lyft Inc now expects free cash flow conversion to come in at over 90% annually between 2025 and 2027. According to its CFO Eric Brewer:

We’ve transformed our business and established a strong foundation for improving profitability and cash flow. Targets we’re announcing today reflect our expectations of margin expansion as we deliver on our strategic priorities.

Earlier this week, analysts at Wells Fargo reiterated their “equal weight” rating on . Their $18 price target translates to about a 6.0% upside from here.

The investment firm expects the ride-sharing company to push its EBITDA to over $120 million in its current quarter despite higher sales, marketing, operational, and fixed costs. Lyft Inc currently commands a market cap of a little under $7.0 billion.

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