Ride-sharing platform Lyft (NASDAQ:LYFT) will start displaying ads on its app, a move that will help the company boost its top line and grow its revenue beyond its core ride-hailing business. In a blog post on Thursday, the company said that Lyft Media is launching in-app advertising and other products that will help brands engage with the platform’s users throughout their entire journey.
Lyft Aims to Capture Advertising Revenue
Lyft said that in-app ads will be displayed on riders’ ETA (estimated time of arrival) screens when they match with a driver, wait for their rides, and during their trips. Brands can now partner with the company for a wide range of digital and out-of-home advertising offerings, including in-app ads, in-car tablets, on-car digital screens, and on-street bikeshare stations.
The company’s ad products are available in the app nationally, across in-car tablets in 12 markets, on-car digital screens in five markets, and across four bikeshare markets. The company said that drivers can request an in-car tablet so that they can boost their earnings with ad revenue and more trips.
Lyft currently has collaborations with several advertising partners, including Bilt Rewards, Audible, and Universal Pictures. The company is also partnering with adtech company Rokt to sell ads.
Lyft is following in the footsteps of its larger rival Uber (NYSE:UBER), which started its ads business in October 2022. Uber recently said that its annual run rate from advertising exceeded $650 million in Q2 and the company is on track to generate $1 billion in ad revenue in 2024. Uber has a more diversified business model than Lyft. Aside from its mobility and ads business, Uber also derives revenue through delivery and freight.
Under the leadership of David Risher, who assumed the position of Lyft’s CEO earlier this year, the company is trying to turn around its business by lowering prices to stay competitive and reducing costs through various initiatives, including job cuts. The company is also evaluating strategic options for its bike division, including a potential sale.
What is the Forecast for Lyft Stock?
Following Lyft’s better-than-anticipated Q2 earnings report, Truist analyst Youssef Squali raised his price target on Lyft to $12 from $10 and reiterated a Hold rating on Wednesday. The analyst said that the company’s Q2 2023 results and Q3 2023 outlook are reflecting “green shoots” of a turnaround as it attempts to regain market share from Uber through competitive pricing and product improvement.
Wall Street’s Hold consensus rating on Lyft stock is based on four Buys, 16 Holds, and one Sell. The average price target of $12.26 implies 11.1% upside.
