Shares of Lyft (LYFT 27.96%) are surging on Friday. The ride-sharing company’s stock gained 27.4% as of 3:25 p.m. ET and was up as much as 28.3% earlier in the day. The jump comes as the S&P 500 (^GSPC -0.07%) and the Nasdaq Composite (^IXIC 0.00%) were essentially flat.
The company reported a profitable Q1 and announced a significantly expanded share buyback program.
Lyft achieves another profitable quarter
Lyft once again is operating in the black, after years of struggling to turn a profit. This marks the third positive quarter of the last four. The company’s net income of $2.57 million, albeit a small profit, is a large improvement compared to Q1 2024’s net loss of $31.54 million. And its 14% top-line growth slightly missed Wall Street’s target, but the continued profitability appeared more important to investors.
Investors were also impressed with Lyft’s free cash flow of $280.7 million, more than doubling the analyst estimate of $136.3 million.
Operationally, it was also a positive quarter; the company’s total rides jumped 16%, exceeding expectations. CEO David Risher pointed out that the quarter marked “the 16th straight period of double-digit year-over-year gross booking growth for the company.”
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Lyft expands its share buyback program
On the strength of its free cash flow generation, Lyft announced it has authorized up to $750 million in stock buybacks. This substantial buyback program signals management’s confidence in the company’s financial position. Investors took note.
The company is turning a corner
Despite today’s gains, the stock has shed nearly 80% of its value since March 2021. However, the combination of profitability and strong operational growth gives the company momentum. It is also valued at less than a third of Uber in price-to-sales. I think Lyft can make a decent addition to your portfolio.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool has a disclosure policy.