LYFT Inc (LYFT)

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Lyft's Earnings Beat Gives Uber Stock a Boost
By: Schaeffer's Investment Research | November 3, 2021

• Lyft shared a top- and bottom-line beat for its third quarter

• Uber is set to report earnings after the close tomorrow

The shares of Lyft Inc (NASDAQ:LYFT) are up 9.1% at $49.46 this afternoon, following the ride share name's third-quarter earnings and revenue beat, which was attributed to a return of drivers and customers, as well as drastic cost cutting. The upbeat quarter is also giving Uber Technologies Inc (NYSE:UBER) a boost, just ahead of its own third-quarter earnings report, which is due out after the close tomorrow, Nov. 4. UBER was last seen up 6.6% at $45.70.

Options traders are ramping up activity on both stocks. Starting with LYFT, 90,000 calls and 50,000 puts have been exchanged so far, which is six times the intraday average. The most most popular is the 11/5 50-strike call, followed by the 53-strike call in the same weekly series, with positions being opened at both.

A look at UBER shows 250,000 calls exchanged so far, which is double the intraday average, and over four times the number of puts exchanged. The December 50 call is being picked up at the quickest clip, while the November 50 call follows closely behind.

Analyst sentiment has fallen on both sides of the aisle following LYFT's quarterly report. No fewer than five firms slashed their price targets, with the lowest coming from Stifel to $58 from $63. Two analysts, however, lifted their price objectives, including Citigroup all the way up to $95. Coming into today, 17 of the 22 analysts in coverage called the stock a "buy" or better. Plus, the 12-month consensus price target of $68.59 is a healthy 38.8% premium to current levels.

Analysts are optimistic towards Uber stock as well, despite its 10.4% year-to-date deficit. Of the 23 in coverage, 20 say "buy" or better, and the 12-month consensus price target of $67.15 is a 47.8% premium to the stock's current perch.

A closer look at Uber stock's last eight earnings reports shows mixed next-day returns. The security settled higher the following day only four times, averaging a 6.7% return, regardless of direction. This time around, the options pits are pricing in a much larger 10.9% post-earnings swing.

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