New Lyft, Inc. (LYFT) Chief Executive Officer (CEO) David Rischer recently bought $1.1 million of the rideshare company’s stock (1), calling his purchase a “Best Investment”. (2)
In case you don’t already know, Lyft operates a marketplace for on-demand ridesharing in the United States and Canada. The company operates multimodal transportation networks that offer riders personalized and on-demand access to various mobility options.
It provides Ridesharing Marketplace, which connects drivers with riders; Express Drive, a flexible car rentals program for drivers; Lyft Rentals that provides vehicles for long-distance trips; and a network of shared bikes and scooters in various cities to address the needs of riders for short trips.
The company also integrates third-party public transit data into the Lyft app to offer riders various transportation options. In addition, it offers access to autonomous vehicles; centralized tools and enterprise transportation solutions, such as concierge transportation solutions for organizations; Lyft Pink subscription plans; Lyft Pass commuter programs; first-mile and last-mile services; and university safe rides programs.
Apparently, Director Aggarwal is ready to share the ride with CEO Rischer. Prashant committed more than $1 million to LYFT shares on August 8, 2023, at $10.34 per share. (3) LYFT insiders have been mass sellers since the company’s Initial Public Offering (IPO), unloading more than $500 million in stock while acquiring a touch more than $3.8 million. (4)
While Rischer is new to the company, Director Prashant has been around for a while and a one-time contributor to the share sales total, selling 50,000 shares in February 2022 at $57.90, pocketing more than $2.89 million. The stock’s crash began shortly afterwards and slid to as little as $7.85 after Prashant’s 2022 exit, dropping $50. So far, the Director has been on the right side of the trade, selling much higher than the stock is today with good timing. Shareholders are hoping he has similar timing and success on the bullish side of the trade.
Wall Street analysts aren’t as enthusiastic as the dual million-dollar investors, CEP Rischer and Prashant. The street has a one-year price target of $12.39 with the stock currently trading at $12.34. (5) Earnings per share are forecasted to hit $0.39 per share this year (ESP) and increase to $0.49 in 2024. Sales are also expected to climb 11.5 percent this year to next, from $4.35 billion to $4.85 billion. (6)
Since the company has primarily lost money, we’ll focus on sales for potential price targets using price to sales (P/S). Since 2020, LYFT has traded at a small discount to competitor Uber Technologies, Inc’s (UBER) price to sales ratio. (7). However, they tend to trend in the same direction with LYFT lagging UBER. The latter has begun to ascend while Lyft is flat with a widening spread.
At the moment, LYFT trades at 1.07 times sales (8) compared to 2.90 for UBER. (9) Based on their historical correlation, Lyft could start to close the gap and possibly trend higher.
OVERALL: It’s been our experience that it’s usually better to own the market leader, UBER in this case. However, Lyft, Inc. (LYFT) could be more compelling in the short term as its P/S has some catching up to do relative to UBER.
With a BETA of 1.78 (10), LYFT is a highly volatile stock and only appropriate for investors with well-above average risk tolerance and a time horizon of at least 18 months, in our opinion.
1 – https://www.secform4.com/insider-trading/1869638.htm
2 – https://finance.yahoo.com/m/d4408a3c-fe52-32a9-b357-934b34bb8d20/lyft-ceo-david-risher-says.html
3 – https://www.secform4.com/insider-trading/1759509.htm
5 – https://finance.yahoo.com/quote/LYFT?p=LYFT
6 – https://finance.yahoo.com/quote/LYFT/analysis?p=LYFT
7 – https://www.macrotrends.net/stocks/stock-comparison?s=price-sales&axis=single&comp=LYFT:UBER
8 – https://finance.yahoo.com/quote/LYFT/key-statistics?p=LYFT
9 – https://finance.yahoo.com/quote/uber/key-statistics?p=uber
10 – https://finance.yahoo.com/quote/LYFT/key-statistics?p=LYFT