Nearly four years ago, Lyft Inc. stopped reporting certain metrics like gross bookings and rides — a move that MoffettNathanson analyst Michael Morton said created a “foggy windshield” for investors trying to understand the drivers of the company’s business.
Now, Morton said he thinks that Lyft
LYFT,
may be planning to bring back some of those metrics with its fourth-quarter report. But he’s not necessarily sure that improved transparency will help the stock.
“With 4Q23 results, management is expected to provide both long-term guidance and perhaps improved disclosures on bookings and volumes,” Morton wrote Tuesday. “Will investors like what they see if management discloses gross bookings and rides? Our analysis of non-traditional
data points suggests not, and any potential historic financials will reveal the unsustainable take-rate tactics used by past management to drive revenue.”
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He downgraded Lyft shares to sell from neutral in his latest note, writing of competitive and margin concerns.
On margins, Morton worried about ever-increasing insurance costs. He expected that recurring insurance expense growth per ride will outstrip the growth in revenue per ride for the next few years at least.
“Looking forward, the company will likely be faced with continued insurance price hikes, which will force Lyft to make a difficult decision,” Morton wrote. Lyft will have to either pass the insurance-cost increases on to drivers or riders, or it will have to eat those costs itself in order to keep prices in line with the market.
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“In our view, the outlook is a lose-lose for Lyft,” he noted. “The company is beholden to Uber
UBER,
to raise prices, and Uber has recently shown patience in raising prices given its better unit economics from both its wider driven base and more diversified business operations.”
Morton cut his price target to $7 from $10 on the stock, which is off about 5% in Tuesday’s premarket action. The shares have lost 14% so far this year and closed Monday at $9.43.
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