Lyft Purchases US Car-Top Advertising Startup Halo Cars
Lyft LYFT recently acquired Halo Cars, a U.S.-based startup that enables drivers to earn money by featuring digital advertisements on top of their vehicles. Halo Cars has operations in the U.S. markets of New York and Chicago. Additional details of the deal were not disclosed.
The latest buyout takes Lyft a step forward to achieve its profit goals on an adjusted EBITDA basis in the fourth quarter of 2021 as it may present a good source of revenue for the company.
With consistent measures to boost the bottom line, the company has been able to reduce adjusted EBITDA loss by 28% to $679 million in 2019. Moreover, adjusted EBITDA loss for the first quarter of 2020 is anticipated to improve 33-35% year over year to $140-$145 million. The same for 2020 is expected in the band of $450-$490 million, indicating a betterment of 28-34%.
However, shares of Lyft have plunged more than 42% since its trading debut on Mar 29, 2019, primarily due to the company’s exorbitant operating expenses.
Lyft’s rival Uber Technologies UBER has also been testing a similar car-top advertising partnership with a startup called Cargo, which provides it with a cut of the advertising revenues, per Axios. During fourth-quarter earnings release, Uber management stated that it expects to reap profits on an adjusted basis in the fourth quarter of 2020, earlier than its previous expectation to become profitable by the end of 2021. To this end, the company is taking measures to cut costs and improve efficiencies as well as reduce losses.
Zacks Rank & Other Key Picks
Lyft sports a Zacks Rank #1 (Strong Buy). Some other top-ranked stocks in the broader Computer and Technology sector are Applied Materials, Inc. AMAT and Cirrus Logic, Inc. CRUS, both carrying the same Zacks Rank as Lyft. You can see the complete list of today's Zacks #1 Rank stocks here.
Shares of Applied Materials and Cirrus Logic have soared more than 62% and 93%, respectively, in a year.
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