Hello all,
It has been about 3 months since you all had a good laugh at me for going "all in" on Bumble. But shares are up nicely since then and I made money; so, joke is on you. Anyways, today I am sharing something with you that may be more funny still: I am betting **>$100k on Lyft call options.** Here is why.
Lyft will end 2024 with a gross booking run-rate of nearly $17 billion a year. From there, applying the ...
**2027 Financial Targets (**[Link](https://s27.q4cdn.com/263799617/files/doc_presentations/2024/Lyft-2024-Investor-Day-Press-Release.pdf)**)**
* A Gross Bookings compound annual growth rate of approximately 15% between full-year 2024 and full-year 2027;
* An Adjusted EBITDA margin (measured as a percentage of Gross Bookings) of approximately 4% on a full-year basis in 2027; and
* Free cash flow conversion (measured as a percentage of Adjusted EBITDA) of more than 90% annually each year between 2025 and 2027.
... will get us to about **$1 billion in FCF by 2027.**
Now, the 4% may underestimate Lyft's potential: Take a peek at Uber’s mobility biz, which claims an adjusted EBITDA margin over 8% ([Link](https://investor.uber.com/news-events/news/press-release-details/2024/Uber-Announces-Results-for-Third-Quarter-2024/default.aspx)). If Lyft can shift its margins into that 5–7% sweet spot, we’re suddenly looking at **up to $1.8 billion in free cash flow**. Compare this FCF upside against Lyft's current market cap under $6 billion today, and you’ve got a scenario that looks like a clown car full of cash.
Lyft's platform-based business model does not really need CAPEX to support its operations. And accordingly, I expect that eventually all FCF will be paid out to shareholders in form of dividends or share buybacks.
Positions enclosed
https://preview.redd.it/7gih1dj5wd7e1.png?width=1170&format=png&auto=webp&s=b82bac0e7f753a45202d4770c1965af8f62933dd
https://preview.redd.it/77xesdj5wd7e1.png?width=1170&format=png&auto=webp&s=224aa3d08ecf1c580b46373fc3692640db4d1f64
https://preview.redd.it/75fxtcj5wd7e1.png?width=1170&format=png&auto=webp&s=54d332aa52d4224557166dbfc8b82a7426b6cd5c