LYFT Inc (LYFT)

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LYFT Surges on Upbeat Q3 Report, Quicker Road to Recovery
By: Schaeffer's Investment Research | February 10, 2021

• The company reported smaller-expected fourth-quarter losses and a revenue beat

• A slew of bull notes rolled in for the ridesharing giant

The shares of LYFT Inc (NYSE:LYFT) are up 5.8% to trade at $56.74 at last check, after the company reported smaller-than-expected fourth-quarter losses, with a revenue beat to boot. A surge in coronavirus cases and the accompanying efforts to slow the spread of the virus have taken their toll on the ridesharing giant, but the firm said it expects to be profitable by the third quarter -- three months earlier than previous projections showed.

In response to LYFT's upbeat fourth-quarter results, a slew of bull notes have rolled in. In fact, no less than 20 firms have hiked their price targets, with two of the biggest hikes coming from CFRA and Susquehanna to $75 and $80, respectively. Analysts were also already optimistic toward the equity coming into today. Of the 22 in question, 16 carried a "buy" or better rating, while six said "hold."

Digging deeper, Lyft stock is currently trading at its highest level since August of 2019. Furthermore, the equity is poised to notch its fifth consecutive close above $52, which has been an area of resistance on the charts for much of the past year. Over the last nine months, LYFT is up 96.2%.

That analyst optimism is reflected in the options pits, where calls are popular. This is per LYFT's 50-day call/put volume ratio of 2.65, which stands in the 72nd annual percentile at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This suggests calls are being picked up at a faster-than-usual clip.

Drilling down to today's options activity, 47,000 calls have crossed the tape so far, which is four times the average intraday amount. Most popular is the weekly 2/12 60-strike call, followed by the 50-strike call in the same weekly series, with positions being opened at the former.

And while short interest is already down 11.8% in the last two reporting periods, 9.2% of Lyft stock's total available float is currently sold short. This means it is possible some of these calls could be shorts hedging against the potential of some unexpected upside.

Lastly, premiums are reasonably priced at the moment. The security's Schaeffer's Volatility Index (SVI) of 78% stands in the 25th percentile of its annual range, implying that options players are pricing in relatively low volatility expectations at the moment.

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