[By Annie Palmer]
Shares of Lyft jumped 6.5% on Tuesday after co-founders Logan Green and John Zimmer said the company could become profitable by 2021. Uber’s stock rose 3.5% on the news.
Lyft will be profitable on an adjusted EBITDA basis by the fourth quarter of 2021, which is one year earlier than analysts were expecting, Green said in an interview Tuesday at The Wall Street Journal’s WSJ Tech Live conference. EBITDA is a measure of operating profits before financing-related expenses like interest, taxes, depreciation and amortization.
“We have in the bank over $3 billion, we have a clear path to profitability and the team is executing well,” Zimmer said. “We need to build trust with a new class of investors and with two quarters beating expectations, we’re excited for the next few quarters.”
Lyft and rival ride-sharing service Uber have been in a race to reach profitability amid growing investor skepticism around money-losing tech companies. Shares of Uber and Lyft have dropped sharply from their IPO prices of $45 and $72 a share, respectively.
Lyft went public in March with ballooning losses of $900 million and no clear path to profitability. Since then, it has shown signs of breaking even. The company reported better-than-expected earnings for the second quarter and CFO Brian Roberts said he believes Lyft reached peak losses in 2018.
Analysts have also grown more confident in the company’s potential. In August, Guggenheim analysts projected the company could become profitable in 2021 instead of 2023, as a result of price increases.