Lyft (LYFT - Free Report) , the second-largest ride-hailing company and streaming player Roku (ROKU - Free Report) will release their quarterly earnings results on Aug 7, after market close. Let us look at how they are poised for this earnings season —
The Zacks Consensus Estimate for Lyft’s second-quarter earnings is pegged at a loss per share of $1.03. Lyft, which debuted on Mar 29, is struggling to find a footing. Since its IPO, the stock has tanked around 25%. And with things not looking up for Lyft, shares are expected to spiral down further in the near future.
But why isn’t Lyft doing well in the first place? New data about Lyft’s drivers is raising a red flag about the future of the company. Ed Lavery, investor specialist at SimilarWeb, recently said that “the number of Lyft drivers using the app (on Android devices) on a daily basis in the U.S. decreased by 18% in Q2.”
The lesser number of drivers using the app shows that riders are shifting to other platforms from Lyft. More drivers in the app lead to shorter waiting period for commuters. But the lesser number of drivers, extend the waiting period for commuters, which doesn’t bode well for the company.
Not only are investors worried about stiff competition from rival Uber Technologies (UBER - Free Report) , Lyft’s recent confirmation of COO Jon McNeill’s impending exit is concerning. What’s more, Lyft had to take 1,000 electric vehicles out of service in San Francisco following reports that a few bikes are catching fire.
Lyft’s operating expenses in the said quarter are, in the meantime, expected to show a substantial increase. This is because Lyft, like Uber, is spending significantly on promotions and driver incentives in a bid to bolster market share in the ride hailing space. Elevated expenses are likely to be a drag on the bottom line.
The Zacks Rank #3 (Hold) company expects second-quarter 2019 revenues between $800 and $810 million. The mid-point of the guided range ($805 million) is below the Zacks Consensus Estimate of around $809 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Meanwhile Roku has gained a whopping 221.4% so far this year despite competition from larger peers like Amazon.com, Inc. (AMZN - Free Report) . The company has been cashing in on robust growth in both active accounts and streaming hours.
In the first quarter, the Zacks Rank #2 (Buy) company registered growth in active accounts to 29.1 million, up 40% year over year and its streaming hours surged to 8.9 billion, up 74% from the prior-year quarter. This in turn is boosting its average revenue per user (ARPU).
Roku’s connected-TV operating system (OS) is also fueling massive growth. A number of manufacturers are incorporating the Roku OS in their connected TV. Possibly encouraged by these developments, Roku has raised its full-year guidance.
By the way, Roku’s performance over the past six quarters has been astounding, with revenues increasing year-over-year in each quarter. This time it’s not supposed to be anything different. For second-quarter 2019, Roku expects revenues between $220 million and $225 million. The Zacks Consensus Estimate for revenues is currently pegged at $224.8 million, which indicates growth of 43.3% from the figure reported in the year-ago quarter.
However, the sky-high valuation of the stock is a concern. Wall Street, by the by, expects a second-quarter loss per share of around 22 cents for the company.
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