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Lyft (LYFT) to Report Q4 Earnings Today: What to Expect

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Lyft, Inc. (LYFT - Free Report) is set to report fourth-quarter results on Feb 11, after market close. Lyft’s top line is likely to have benefited from high customer adoption. Its cheap pricing strategy is expected to have helped it gain market share over its rivals.

However, its bottom line is likely to have been affected by costs related to investment in technology development and insurance costs.

Overall, investors expect Lyft to have performed well, since its prime rival, Uber Technologies, Inc. (UBER - Free Report) reported upbeat fourth-quarter results earlier this month. Uber’s revenues grew 43% year over year, excluding currency fluctuations, primarily boosted by the ridesharing business.

Reduced Pricing & Rental Service

Lyft’s decision to enter the car rental segment along with the self-driving ride-sharing cars services is expected to have been a positive. Lyft’s initiatives and price-reducing strategies are expected to have given it a boost.

The company has been constantly reducing prices and offers cheaper shared rides to its customer. This has not only attracted more customers but also helped in improving its profit margin.

Additionally, the car rentals business is in perfect harmony with the ride-sharing segment and may help the company come up with promising results. And, why not? Other car rental players like Avis Budget Group, Inc. (CAR - Free Report) and Hertz Global Holdings, Inc. (HTZ - Free Report) generated operating income in the past year.

Further, the Zacks Rank #2 (Buy) company has an edge over its larger rival Uber in the self-driving cars business, thanks to its partnership with Alphabet Inc. (GOOGL - Free Report) . Alphabet’s Waymo helped Lyft develop autonomous driving technology. The self-driving car business has been operating in Arizona since June 2019, without any casualties. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costs to Weigh on the Bottom Line

Costs have been a major concern for Lyft. Intense competition does not allow the company to increase prices. In fact, a slight increase in pricing could give rivals an opportunity to lure Lyft’s existing customers. The company had reported increase in active riders by 28% in third-quarter 2019.

Further, insurance costs have affected Lyft’s bottom line. Per a report by Benchmark, insurance paid by Lyft has been rising since 2016 and is projected to reach $600 million in 2020. This is expected to weigh on the company’s results this time around.

Recent Developments

Like other firms, Lyft has been working on ways to lower cost and increase profitability. In fact, the company started restructuring sales and marketing teams to achieve its 2020 business goals last month. In January 2020, the company announced nearly 100 layoffs as chief executive Logan Green intends to turn Lyft profitable by late 2021. Lyft is expected to unveil its restructuring plan on Feb 11, during the quarterly results.

Lyft’s prior investments in acquiring complementary businesses will also boost the company in the near term.  

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