Lyft’s Rough Riders, Planet Fitness Blasts Off & Hobson’s Choice

Lyft: A Not-So-Easy Rider

Great Ones, when I am traveling and, oh, my jetlag, so weary.

When taxis drive by, and my luggage burdened be. Then, I am still, and I wait here with my smartphone, until you come and stop in front of me…

You Lyft (Nasdaq: LYFT) me up, so I can get to my hotel room.

You Lyft me up to tackle rush hour traffic.

I am strong, when I am in your Lyft Lux rides. You Lyft me up to more than I can be.

Is … is that … is that Josh Groban?

Yes. Yes, it is.

Are you OK?

Perfectly fine, Great Ones. For one, I don’t control the jukebox in my head — so we get weird stuff like this on occasion.

On occasion? Riiiight.

And for two, I am kinda sad that my favorite ride-hailing company is struggling … and I needed a bit of inspiration. Josh Groban kinda hits the right spot, you know?

To clarify, Lyft is my favorite ride-hailing company to ride in — not invest in. I wouldn’t invest in either Lyft or Uber (NYSE: UBER) right now. The ride-hailing market is just … weird and unprofitable right now.

Case in point, bright and early this morning, Lyft disappointed Wall Street with its Q3 report. Here are the headline numbers:

• Earnings per share: $0.10 versus $0.07 expected.
• Revenue: $1.054 billion versus $1.056 billion expected.

Taking a deeper look at Lyft’s report, we find that revenue jumped 22% from 2021, adjusted earnings spiked 106% from last year and active riders rose 7% year over year.

Sounds like a pretty solid report from Lyft, right? So why did Lyft stock plunge more than 21% today?

As usual, Great Ones, the devil is in the details…

First, Lyft’s active riders only grew 2% from Q2, which many analysts said was far too little growth. In fact, Lyft isn’t even at pre-pandemic rider levels yet … unlike rival Uber. Furthermore, Lyft is still struggling to get back to pre-pandemic driver levels as well … unlike rival Uber.

Finally, Lyft’s Q4 revenue projections were below Wall Street’s expectations. The company said that historically low ride-shares in November and December will impact Q4 results … and that October has been its best month for ridership.

Yes, the same October that let Lyft down this Q3. And that ridership is going to fall through the rest of the year.

“Although we have some concerns about the pace and breadth of Lyft’s broader post-pandemic revenue recovery, the company has done a solid job monetizing its Active Rider base over the past few quarters,” said D.A. Davidson Analyst Tom White.

Yes, Lyft apparently has a very loyal rider base … including yours truly. But that rider base isn’t growing as fast as Lyft would like.

Now, I can’t quite tell you why I like Lyft better than Uber for rides. It could be because I never wait for Lyft rides as opposed to Uber. It could be that the Lyft drivers I’ve had have all been quiet. I don’t like a lot of chatter. Just pick me up and drop me off, please.

It could be that I’m just being contrarian and stubbornly supporting the underdog once again.

The fact of the matter is nearly all of the reasons I like Lyft are more than likely the reasons why Lyft is struggling — except for the “drivers talking” part, that is.

Despite its seemingly catchier name, Lyft wasn’t the first mover in the ride-hailing market. That was Uber. And because of that, Uber is now the default household name for ride-hailing. It’s like Xerox back in the day … or Band-Aid … or Kleenex … or Google. You get the picture.

For Uber, that is a massive advantage. Heck, even I say “I’ll call an Uber,” even though I’m using Lyft.

So while I and many others trust Lyft to Lyft us up so we can hike up mountains … the company needs something else to help it be more than it can be, so to speak.

The bottom line is to avoid LYFT stock for now … but keep an eye on it to see just how well it handles the economic firestorm on the horizon. If it can survive the next year, it might be worth your investment dollars.

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The Good: It Came From Planet Claire

Er … Fitness. I know it came from Planet Fitness (NYSE: PLNT).

It drove an earnings rally … faster than the speed of liiiight.

Get. To. The. Point!

From what the company’s management says, Planet Fitness is continuing its “steady recovery from the pandemic.” But according to the actual earnings report? Planet Fitness is already back to full strength — and then some.

The purple-and-yellow gym chain just reached an all-time record of 16.6 million members. Revenue grew across the board, from franchise locations, corporate-owned stores and even equipment sales.

While sales and earnings both beat expectations, it’s Planet Fitness’ own expectations that get my attention.

Planet Fitness upped its revenue growth guidance from the mid-50% range to the high-50% range. Better still, the company expects earnings to grow in the mid-90% range. Dang.

According to the press release:

Members trends remained strong in the quarter with joins back to historical pre-pandemic seasonality. Also, members who are visiting the gym continue to visit more frequently, and cancels are lower compared to 2019.

And all this is before the post-holiday shame and New Year’s resolution subscriptions start. There’s a reason why PLNT stock shot up 12% today.

What’s that I hear? Yup, that’s the sound of Peloton becoming less and less relevant.

The Bad: How About Take-Three?

So Planet Fitness has been killin’ it in the gym all quarter long … but as for video game maker Take-Two Interactive (Nasdaq: TTWO)? Well, Take-Two was breaking its back on its own whale-hunting quest…

Come again, Moby Dick?

You know, whales … the few but mighty spenders that keep mobile games afloat? As Take-Two CEO Strauss Zelnick explains:

So it also stands to reason that Take-Two’s earnings were absolute whale$@!%.

Those 5% of mobile gamers who actually waste money on Farmville just aren’t spending as much … and why would they? Have you seen the price of Hot Pockets and Mountain Dew lately? Jeez.

Sure, Take-Two’s console and PC efforts are going along swimmingly … after all, it’s the king of milking Grand Theft Auto Online for everything it’s worth. Net bookings didn’t grow 53% year over year for nothing, but full-year guidance is another story, showing the impact of mobile gaming declines.

Take-Two only expects to bring in $5.4 billion to $5.5 billion in net bookings for the full fiscal year, whereas the company previously predicted revenue between $5.8 billion and $5.9 billion.

But according to Zelnick, though: “This is not games not performing.” Make of that what you will.

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The Ugly: Choose Your Own Ugly Adventure

Great Ones, it’s time to pick your poison. Time to vote for the absolute worst, most ridiculous, most boneheaded idea of the week. Ready?

Your first choice: Zoom meetings … in a movie theater. Thanks, AMC (NYSE: AMC).

Have you ever been chilling in your home office, getting some work done and thought to yourself: I’d love to be in a huge dark theater with these people while some disembodied execs talk business at us from a 50-foot screen?

I mean, does anyone remember that Apple commercial from a few years ago? Terrifying.

AMC wants to offer you the chance to hold 75- to 100-person meetings that combine “the excellent experience of Zoom with the comfort and state-of-the-art sight and sound technology of AMC’s modern and centrally located theatres.”

“Comfort” is a rather grandiose term for having your shoes stick to every surface as you fight a poorly functioning flip-up seat … but hey, if there’s nachos and mozz sticks, I might be convinced.

Also … is this supposed to be productive? Like, to anyone? Have y’all been in a movie theater before? Do you have to use an iClicker to chime in lecture hall style? That said, you get a document up on that screen, and you are seriously looking at that document…

So that’s one bizarre idea to be birthed from the boardroom … but is it a worse idea than Elon’s next big-brained move? Let’s see…

Your second choice: If you weren’t already confused by the Musky dumpster fire over at Twitter HQ, here’s some more fuel. How about we paywall Twitter? Like, all of it.

With Twitter’s advertisers pulling away due to Elon being Elon — you know, like firing hordes of Twitter employees and then trying to get them back onboard once the layoffs went too far — the company is trying to drum up cash any which way.

Pay-to-play identity verification wasn’t enough, apparently, so rumors say you might have to pay to use Twitter full stop. These are mere rumors right now … but seeing how “well” the Twitter takeover has gone so far, I wouldn’t put it past Musk.

Alright, time to vote. Which do you think is the stupider idea: Zoom meetings coming to a theater near you or paywalling all of Twitter?

Let me know in the inbox below. And if you ever have a stock or investing idea you’d like to see Great Stuff cover, let us know at: [email protected].

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Regards,

Joseph Hargett
Editor, Great Stuff