Lyft, Inc. (NASDAQ:LYFT): Are Analysts Optimistic?

Lyft, Inc. (NASDAQ:LYFT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Lyft, Inc. operates a peer-to-peer marketplace for on-demand ridesharing in the United States and Canada. With the latest financial year loss of US$340m and a trailing-twelve-month loss of US$65m, the US$4.5b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Lyft's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Lyft

Consensus from 39 of the American Transportation analysts is that Lyft is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of US$22m in 2025. So, the company is predicted to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 63%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Lyft's upcoming projects, however, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Lyft currently has a debt-to-equity ratio of 174%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Lyft which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Lyft, take a look at Lyft's company page on Simply Wall St. We've also put together a list of relevant factors you should further research:

1. Valuation: What is Lyft worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Lyft is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Lyft’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.