When Will Lyft, Inc. (NASDAQ:LYFT) Become Profitable?

With the business potentially at an important milestone, we thought we'd take a closer look at Lyft, Inc.'s (NASDAQ:LYFT) future prospects. Lyft, Inc. operates a peer-to-peer marketplace for on-demand ridesharing in the United States and Canada. The US$5.6b market-cap company’s loss lessened since it announced a US$340m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$65m, as it approaches 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.

See our latest analysis for Lyft

Consensus from 41 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$49m in 2025. So, the company is predicted to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 64% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Lyft given that this is a high-level summary, but, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Lyft is its debt-to-equity ratio of 153%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around 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 compiled a list of pertinent factors you should look at:

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.