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Lyft stock (Nasdaq: LYFT) stock has captured the spotlight today, soaring by 20.9% on a day when the stock are otherwise undecided. Lyft has risen comfortably above the $15 per share level for a market capitalization of $6.4 billion. The stock is a stone’s throw away from its 52-week high of $19 per share and is trading on volume of 45.1 million shares, more than double its average daily volume.
Lyft stock is rallying after reporting its Q1 earnings, the highlights of which included a surprise profit, improved Q2 outlook and share repurchase program through which it will return value to shareholders. Most of Wall Street has kept a “hold” rating on Lyft shares, but today’s results have shifted the meter to the bullish side. There’s also some relief on the activist investor front.
Positive Catalysts
Lyft reported a surprising Q1 profit after previously operating at a loss. The company’s Q1 earnings came in at $2.6 million, or a penny a share. The company’s profitability is being driven by improved ridership, including a 16% year-over-year increase to over 218 million in the quarter, surpassing analyst estimates. Lyft offered a Q2 outlook on the upside of estimates, adding further fuel to the rally.
Lyft is not wasting any time, choosing to return value to shareholders right away in the form of a share buyback program. The Lyft board is looking to bolster its share buyback program by $250 million to $750 million, $500 million of which will be activated over the course of the next 12 months. In response, activist investor Engine Capital is putting its campaign against LYFT stock to rest.
What Now?
Lyft’s turnaround appears to be very company specific rather than any industrywide trend that would spill over to other ride-share stocks. But it still has the power to lift other boats, as industry peer Uber Technologies (NYSE: UBER) sees a fractional gain of 0.36% today.
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