Shares of Lyft experienced a significant increase on Friday, with the ride-sharing company’s stock rising 27.4% as of 3:25 p.m. ET, reaching a peak of 28.3% earlier in the day. This rise occurred as both the S&P 500 and the Nasdaq Composite were essentially flat.
The company announced a profitable first quarter and the expansion of its share buyback program.
### Lyft Reports a Profitable Quarter
Lyft has reported another profitable quarter following years of financial struggles. This marks the third profitable quarter in the last four. The company achieved a net income of $2.57 million, a notable improvement compared to the net loss of $31.54 million in the first quarter of 2024. Despite a 14% top-line growth slightly missing Wall Street’s expectations, investors appeared more focused on the sustained profitability. Lyft also reported free cash flow of $280.7 million, significantly exceeding analysts’ estimate of $136.3 million.
Operationally, Lyft experienced a positive quarter with a 16% increase in total rides, surpassing expectations. CEO David Risher noted that this quarter marked the 16th consecutive period of double-digit year-over-year gross booking growth for the company.
### Lyft Expands Share Buyback Program
Boosted by its free cash flow, Lyft has authorized up to $750 million in stock buybacks. This decision reflects management’s confidence in the company’s financial standing, drawing attention from investors.
### A Turnaround for Lyft
Despite recent gains, the stock has lost nearly 80% of its value since March 2021. However, the combination of profitability and strong operational growth provides positive momentum for the company. Lyft is valued at less than a third of Uber in terms of the price-to-sales ratio, indicating potential for growth.
Johnny Rice, the author, does not hold a position in any of the mentioned stocks. The Motley Fool has positions in and recommends Uber Technologies.
