Do Lyft (LYFT) and Uber (UBER) have some sort of agreement to flip-flop what they project each earnings report? Last time around, it was Lyft with optimism about profitability and maintaining a smaller expense to revenue ratio as compared to Uber. This time around, Uber pushed its profitability target forward a year while Lyft maintained its projection for the end of 2021. Both companies did clarify this is only in regards to adjusted EBITDA as their respective stock-based compensation expense continues to be a large offset to revenue. We're talking between one-third to one-half of total revenue. That's an issue, and one not going away anytime soon from either of these companies.
Lyft posted strong revenue growth of 68%, topping $1 billion versus estimates of $984 million. Active ride customers rose 2.7% to 22.9 million versus the prior quarter which puts it about 20% of the size of Uber. The good news is the company is using less discounts and promotions to attract rides. Again, we see Uber on the opposite side of the coin in this equation.
The stock is trading lower by 8.5% Wednesday morning, likely due to the revenue guidance range for the full year falling in-line with current estimates. The tepid 2.7% rider growth won't excite too many on the headline, but hearing more riders are paying full price, I'd take that as it helps the bottom line which is reflective in the $0.19 per share beat on the bottom line.
Lyft has steadily marched higher since the October lows. We see a solid channel with the stock hitting the upper end this week. With the selloff we're seeing mid-week, I'm looking at $45 as an entry with the 21-week simple moving average (SMA) meeting the support level of the channel. For more aggressive investors, the 10-week SMA may be more attractive to some investors. Otherwise, I would be patient. There's nothing to chase as the dip buying is done, and Uber may be back on center stage until the next earnings report.
