The Lyft valuation of $24.3 billion in its initial public offering in 2019 grabbed the attention of many investors. While its start on the stock market was rocky and it certainly wasn’t helped by the COVID-19 pandemic, Lyft has been recovering since late 2020, making investors consider the strong possibility of revival.
With investors showing interest in the ride-hailing industry, you may be wondering how to buy Lyft stock and if it will help you diversify your own stock portfolio. Read on to find out more about the company, its stock performance, and how to buy its shares.
About the Company
Lyft’s main services focus on online ride-hailing for customers in the United States and Canada. Founded in June 2012, Lyft Inc. offers car hires, motorized scooter rental, and a bicycle-sharing system. It also had a self-driving cars division, but it sold it to Toyota’s Woven Planet in April 2021. All of Lyft’s services can be checked and ordered via the company’s mobile app.
Lyft became a publicly traded company in March 2019. Its competition, Uber, did the same a few months later, creating a stir among traders. This was the first time these ride-hailing companies were listing their IPOs on the stock market and made their shares accessible to interested investors.
Lyft IPO stock price was $72 per share. The stock remained in high demand, reaching $87.33 per share on the first day. However, the price started dropping quickly, reaching $60 just two weeks later.
The company’s first year on the stock market was a tough ride, especially as other major ride-sharing companies joined the competition soon after Lyft. However, investors have been keeping their eyes on its stock performance, and its revival since the COVID-19 pandemic onset shows positive signs. While not breaking the $72 benchmark, Lyft share price close of July 10, 2021, at $60.06 is an indication of the company holding its ground on the market.
Based on its 2021 first quarterly report, Lyft stock earnings are an indication of the company’s potential to rebound from the pandemic. Its Q1 revenue of $609 million is a 7% increase on its 2020 fourth-quarter revenue of $569.9 million.
The recent sale of their self-driving cars division will boost Lyft growth in revenue by $550 million, improving its profitability in the future. Both Lyft and Uber scored big when Californian voters pushed through Proposition 22 in the November 2020 elections. This allowed gig economy players, such as Lyft, to keep their team of independent contractors as contract workers and avoid paying employee benefits.
With this victory, Lyft stock forecast became promising, and share prices soared for the whole ride sharing market. The gig economy faces new changes to the status of their contract workers since the Biden administration announced them in May 2021. However, Lyft feels confident these issues will be sorted.
Should You Buy Lyft Stock?
Investors are eyeing the sharing economy closely as they decide whether to invest in any company selling shares on the stock market. Ridesharing companies such as Lyft fall into this category. And, while Lyft has shown promising growth, you may still be wondering “is Lyft a good stock to buy?”
Lyft’s Q1 results, announced on May 4, 2021, show growth in active riders from 12,552 million at the end of December 2020 to 13,494 million at the end of March 2021. A 36.4% growth rate from March 2020 to March 2021 in revenue per active rider is also indicated.
Logan Green, co-founder, and CEO of Lyft, is optimistic about the company’s recovery. He talks about “…attacking the trillion-dollar plus market opportunity in front of us” as reported from Lyft’s annual revenue during the Q1 2021 announcement. Lyft’s quarterly report in Q1 2020 showed $995.7 million revenue; this is significantly higher than $609 million in Q1 2021.
Other considerations could still make Lyft shares a worthwhile addition to your profile, so let’s delve some more into the company’s stock performance.
Lyft Stock Performance
Lyft’s Composite Rating of 45 indicates its ranking in the bottom half of all stocks. However, its main competitor, Uber, has a Composite Rating of 40, which is even lower. Another fundamental take note of is the company’s EPS rating of 19 (out of 99). This is a low rating if you’re factoring in the Lyft profitability ranking.
In May 2021, Lyft stock price per share dropped drastically and hovered around $46 and $49. However, from May 21, 2021, its share value has been steadily increasing from around $52 to its current price.
Lyft market cap has also increased from a low $15.16 billion on May 13, 2021, to $19.78 billion on July 10, 2021. Nasdaq reports the company’s 52-week performance range at a high of $68.28 and a low of $21.34.
The last Lyft earnings date of May 4, 2021, reported $0.35 EPS while the company had a ROA of -32.79% and a free cash flow of -84.50 at the end of March 2021. Lyft doesn’t pay out dividends.
Many investors exploring ridesharing companies on the stock market are considering picking up Uber or Lyft stock. Uber revenue statistics make it the number one ridesharing company, but Lyft comes in a very close second.
Lyft’s stock market performance has been running neck-to-neck with Uber since June 2021. Investors continue to watch both Uber and Lyft IPO stocks, and adding both could work for growth traders. While the company’s share price is relatively lower, it continues to be volatile, which could be attractive to short-term investors looking to gain from quick rises.
Investment analysts are encouraging investors to buy Lyft stock based on the company’s upward trend since June 2021. Financial analysts offering a 12-month forecast for Lyft price estimate a median target of $73.50, with an estimated high of $86. This is an increase of +17.08%.
How to Buy Lyft Stock
To buy Lyft shares, you need to go through a broker. Using an online broker or a trading platform is a go-to solution most people will choose. Talking to a financial advisor is useful if you want to get advice about adding Lyft to your portfolio.
Trading Platforms/ Online Brokers
Online stock brokers are a good way to buy Lyft stocks, even if you’re a beginner entering the stock market. These brokers will guide you through the process of opening your own account and you’ll be able to simply choose the Lyft ticker and start trading. In addition, most offer trading tutorials and even a range of other investment tools.
Trading platforms are ideal for both novice and advanced investors. Some platforms, such as Webull, offer commission-free trading to users of its mobile- and desktop-friendly app. Lyft investment traders from the United States, US Virgin Islands, or Puerto Rico may find the Charles Schwarb platform useful. This platform is also viable if you’re trading in:
Consider using Stash if you’re a beginner, you’re still unsure how to buy Lyft stock, and are just starting to build your portfolio. This trading platform is well-respected, and once you’re familiar with its setup, you can have fun adding stocks to your investment portfolio.
Buying Lyft stock through a financial advisor works well for the entry-level trader wondering how to invest in Lyft. Professionals can monitor the company value for beginners, but can also help experienced investors who want to save time and effort. In addition, financial advisors usually offer more comprehensive investment plans, and using them to buy just one stock isn’t the best use of their talents.
Using a financial advisor to invest in Lyft stocks makes sense if you want expert advice before adding it to your investment portfolio.
While some investment analysts consider Lyft stocks too volatile, other experts in the industry recommend buying based on the company’s recent revival status. The company’s diversification from ride-sharing into other areas may further strengthen its stock value.
Lyft profits are expected to increase significantly in the last quarter of 2021, with the company focusing on a profitable outcome. If taking a risk on the stock market doesn’t threaten your portfolio, then riding with Lyft stocks could be a worthwhile investment.
Not at the moment. However, Lyft is counting on being profitable in the third quarter of 2021 because of cost cuts and an increased demand on their services in recent months. The company sees its profitably being sustained beyond this quarter as it continues to invest in other growth opportunities.
Fidelity Investments is the largest shareholder of Lyft with 13.6% of total shares owned.
John Zimmer and Logan Green founded Lyft together in 2012. John Zimmer is the president of the company, while Logan Green is the CEO.
Lyft’s net worth, as of March 2021, is $5 billion.
It’s not possible to buy Lyft stock without a broker as the company doesn’t offer a Direct Stock Purchase Plan (DSPP). When deciding how to buy Lyft stock, the only option is to go through a licensed professional.