Shares of Lyft IPO increased on Monday after analysts predicted a Lyft profit by 2021, compared to the initial prediction of 2023. This made shares of the company jump by 4.3 percent.
Lyft Profit Predictions
The analysts’ report helped ease some of the concerns of interested investors because, since debuting on the market, Lyft has sustained some pretty serious losses. Shares have fallen almost 30 percent since March. On top of that, Lyft has not proven itself reliable when it comes to competing with Uber and other rivals. These factors led analysts to believe it would be 2023 before the company saw a profit.
Lyft, however, has stepped up and begun making an effort to profit sooner rather than later. Lyft Financial Chief Brian Roberts mentioned fare increases in certain cities in June. There has been no further information regarding how much fares were increased or where though.
Analysts predict the company’s annual losses will decrease in the next few years. Predictions state that losses will go from $911 million this year down to $24 million by 2024.
“We are raising estimates, putting us significantly ahead of consensus,” the report stated. “The main driver is assumed price increases, with limited impact on demand.” Lyft executives have a target price on shares of $60. It closed at $51.21 on Monday.
Lyft and Uber Controversies
Surprisingly, Uber isn’t doing much better in the market. Shares are down 26 percent since May (compared to Lyft’s 30 percent decrease). Both companies are having issues with transparency since going public though.
Mainly, people are concerned about ride-sharing safety as well as the rights of individuals driving for Uber and Lyft. Both have begun to take a larger portion of each driver’s fare in recent years. Neither company has reported accurate earnings from this. Jalopnik surveyed Uber and Lyft drivers to see how much they’re really taking.
According to the drivers, Uber is keeping about 35 percent of every fare. Lyft keeps around 38 percent. Neither claimed those numbers in public reports. Uber claimed to only take 19 percent, while Lyft does not publicly share their rates at all. That’s not to say you can’t make decent cash with these ride-sharing apps (see video below).
Despite these controversies, both companies are excelling. Millions of people use Uber and Lyft daily. While the apps aren’t going anywhere, it will be interesting to see how these IPOs perform in the near future.
Readers, what do you think about Lyft profit potential? Will the company see profit before it sinks on the market?