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What Happened?
Shares of ride sharing service Lyft (NASDAQ: LYFT) jumped 27.4% in the afternoon session after the company reported strong first quarter 2025 results which significantly beat analysts' EPS and EBITDA expectations. Rides climbed 16% and the number of riders grew 11%, both setting new highs.
Notably, Lyft's nearly $1 billion in trailing twelve-month cash flow signals a business increasingly capable of funding growth and returning capital, backed by a newly expanded $750 million share buyback plan. On the other hand, its revenue slightly missed. Still, we think this was a solid quarter due to the better-than-anticipated profitability.
The shares closed the day at $16.65, up 27.9% from previous close.
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What The Market Is Telling Us
Lyft’s shares are very volatile and have had 25 moves greater than 5% over the last year. But moves this big are rare even for Lyft and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 30.2% on the news that the company reported robust third-quarter earnings, significantly surpassing analysts' expectations for both revenue and EBITDA.
On the growth front, Lyft saw a 9% increase in active riders and a 6% increase in ride frequency, fueled by growth in Canada, heightened demand during the back-to-school season, and the introduction of new products like Price Lock.
Moving on to the bottom line, Lyft reduced its per-ride incentive expenses by 17% year-over-year, achieving efficiency well ahead of its annual multiyear target of 10%. Profitability ratios were also supported by reductions in insurance costs.
Looking ahead, Lyft planned to expand its business in Canada, drive engagement via partnerships with DoorDash and autonomous vehicle companies, and grow Lyft Media (advertising business) to enhance revenue. Overall, we think this was an impressive quarter.
Lyft is up 21.6% since the beginning of the year, but at $16.60 per share, it is still trading 10.7% below its 52-week high of $18.59 from November 2024. Investors who bought $1,000 worth of Lyft’s shares 5 years ago would now be looking at an investment worth $529.34.
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