Episode Details

Lyft (LYFT) Q2 2026 — Q2 2026 (3 months ended June 30, 2026): Gross Bookings $5,504.2M +22.6% (bar ~$5.37B, a BEAT). Revenue $1,843.5M +16.1% (bar ~$1.81B, a BEAT). Adjusted EBITDA $177.2M +36.9%, 3.2% of Gross Bookings (a BEAT). GAAP diluted EPS $0.13 vs a $0.15 bar - a two-cent MISS, and Lyft publishes no adjusted EPS. Income from operations $2.4M to $47.6M. Free cash flow FELL 3.0% to $319.6M. Rides 262.4M +11.8%, Active Riders 30.5M +16.9%. The 8-K was accepted 4:10pm ET, AFTER the close, so Friday Aug 7 is the reaction session: $16.30 to $17.46, +7.12%. Lyft's income from operations went from $2.4M to $47.6M and adjusted EBITDA rose 36.9%. But cost of revenue FELL, $935.7M to $926.4M, while Rides rose 12% - and Lyft's own 10-Q names the cause: a cost-per-mile decrease from California's rideshare insurance reform bill SB 371, plus favorable changes in estimates on claims from prior years. Gross profit rose $264.7M and Lyft handed most of it back: rider incentives went $99.9M to $186.9M, +87%, so only 18c of every extra gross-profit dollar reached adjusted EBITDA. The tell is the cash: free cash flow FELL 3.0% while EBITDA rose 37%, because the insurance float filling it halved, $246.5M to $127.2M. And the two-cent EPS miss is entirely tax - $4.1M to $28.1M, 64% of it non-cash. THE CALL: BUY (3/5, FAIR VALUE $22.90 vs THE $17.46 CLOSE - 31.2% ABOVE THE PRICE, AND ABOVE WALL STREET) — base-case value ~$22.9 vs ~$17.46 today. KEY METRICS: - CALL: BUY 3/5, fair value $22.90 vs the $17.46 Aug 7 close = +31.2%. Bull $34.90, bear $10.80, buy under $19.50. EV $5.83B = 0.29x trailing Gross Bookings $20.3B; owner earnings $442M (FCF $1,112.3M less $360M float less $311M stock comp) = 13.2x. - Street: ~55 analysts, consensus target ~$19.07 (+9%). UBS raised to $17 and BofA to $18 (Underperform) on Aug 7, 2026 - both below the price. We are ~20% above consensus. What to watch: UP: Gross Bookings +22.6% and accelerating, Q3 guided to $5.50-5.67B (+15-19%) and adjusted EBITDA $183-203M. A record 30.5M Active Riders (+17%), the 7th straight double-digit quarter, and 262.4M Rides (+12%). SB 371 permanently cuts Lyft's largest cost line. Net cash ~$789M; 28.5M shares retired for $400M near $14, $850M still authorised, diluted count -8.7% YoY. EV ~$5.83B is 0.29x trailing Gross Bookings against $442M of owner earnings. DOWN: the operating inflection came from a statute and a prior-year claims release, not the marketplace. Only 18c of each extra gross-profit dollar survived an 87% rise in rider incentives. Free cash flow fell 3% and ~30% of trailing operating cash is insurance float that has halved. Rides per Active Rider fell 9.0 to 8.6. Capex more than doubled for the Waymo depot. And autonomy threatens the take rate itself. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.