Lyft Stock Soars To Five-Month High As Engine Capital Ends Activist Campaign After $750M Buyback Pledge

Lyft’s (LYFT) expanded stock repurchase plan has prompted Engine Capital to drop its activist campaign and withdraw its board nominees on Friday.

Lyft’s stock rocketed as much as 19% at the opening bell to a five-month high, tracking broader market gains following Trump’s U.K. trade agreement and ahead of U.S.-China trade talks scheduled over the weekend.

During its first-quarter (Q1) earnings on Thursday, the ride-hailing company announced that it has increased its stock buyback program to $750 million, up from $500 million. Lyft plans to deploy $500 million over the next 12 months and $200 million within three months.

"We appreciate the Board's willingness to engage with us about steps that can be taken to enhance value for all of Lyft's shareholders,” it said in its filing with the U.S. Securities and Exchange Commission (SEC).

The withdrawal comes a little over a week after Engine Capital pushed the company to initiate a $750 million accelerated share repurchase program and revise its governance structure. 

The investment firm said this includes dismantling the dual-class share system that grants disproportionate voting power to the co-founder and de-staggering the board.

It had also nominated two candidates to the board, seeking to replace current directors Sean Aggarwal and Betsey Stevenson. Engine Capital cited a lack of financial sophistication and public company expertise, pointing out that seven of the ten current Lyft directors have not served on any other public company board.

“Following a series of productive conversations, the Board has taken a meaningful first step by committing to substantial share repurchases in the coming quarters,” Engine Capital said, citing the move as its reason for withdrawing and giving the company time to follow through on its new commitments.

On Thursday, the company reported earnings of $0.24 per share, beating Wall Street’s estimate of $0.19, according to Koyfin. However, its revenue of $1.45 billion missed the forecast of $1.47 billion. 

Goldman Sachs upgraded Lyft’s stock to ‘Buy’ from ‘Neutral, with a price target of $20 following the company’s first-quarter (Q1) earnings report. Goldman said it “sees strong execution in a stable industry backdrop” for the company, as per TheFly.

Barclays also increased its price target to $20 from $19 but kept an ‘Equal Weight’ rating on the shares, citing Lyft’s “significant moves” in Canada, Europe, and new domestic suburbs. 

Lyft’s stock is up 18% year-to-date but has fallen 13% over the past 12 months. 

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