Stock Story -
What Happened: Shares of ride sharing service Lyft (NASDAQ: LYFT) jumped 5.4% in the afternoon session after major indices rose, with the S&P 500 up 0.8% while the Nasdaq gained 1.2%, as the Federal Open Market Committee left the policy rate unchanged at 5.25-5.50% during its March 2024 meeting. In addition, the committee guided three rate cuts in 2024, in line with its previous projections and market expectations. However, the Committee continued to highlight the focus on getting inflation back down to the 2% target.
Ahead of the meeting, markets were worried that recent inflation data would push the Fed to keep rates higher for longer, potentially resulting in fewer rate cuts in 2024. Notably, the Bureau of Labour Statistics reported that the CPI (Consumer Price Index - a gauge of average price consumers pay for goods and services) for the month of February 2024 came in slightly hotter than expected at 3.2% year on year (vs. Consensus for 3.1%), mostly due to increases in gasoline and shelter prices.
As a reminder, the driver of a stock's value is the sum of its future cash flows discounted back to today. With lower interest rates, investors can apply higher valuations to their stocks. No wonder so many in the investment community are optimistic about 2024. We at StockStory remain cautious, as following the crowd can lead to adverse outcomes. During times like this, it's best to own high-quality, cash-flowing companies that can weather the ups and downs of the market. After the initial pop the shares cooled down to $19.20.
Is now the time to buy Lyft? Find out by reading the original article on StockStory.
What is the market telling us: Lyft's shares are quite volatile and over the last year have had 49 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 16 days ago, when the company gained 7.2% on the news that RBC (TSX:RY) Capital upgraded the stock's rating from Sector Perform to Outperform and raised the price target from $17 to $23. The new price target implied a potential 30% upside from where shares traded when the upgrade was announced.
Lyft is up 39.1% since the beginning of the year. Investors who bought $1,000 worth of Lyft's shares 5 years ago would now be looking at an investment worth $245.24.