Risk-hungry investors drive Metro Bank shares to 12-month highs

High gearing to rising rates and a lenient regulator have helped the rally

Traders who took a punt on ‘challenger’ lender Metro Bank (MTRO) at 70p in October last year, just ahead of its third-quarter trading update, will be high-fiving themselves this week.

With a fortnight to go before it reports full-year earnings on 2 March, the shares have more than doubled in price and show no signs of slowing their advance thanks to steadily rising revenue and margin forecasts.

With a significantly lower net interest margin than its highstreet rivals, the company has benefited disproportionately as the Bank of England has ratcheted up interest rates from 0.25% to 4%.

Higher cash-flow generation has relieved some of the pressure

Lyft in name only as quarterly loss stuns investors

Investors have been encouraged by many technology companies now having a sharper focus on growing profits rather than simply chasing growth at any price, but ride-hailing app

Lyft (LYFT:NASDAQ) seems to have missed

the memo.

The San Francisco-based company posted its worst one-day share price fall since its 2019 stock market listing after it dramatically missed earnings forecasts for the three months to 31 December. Analysts had predicted $0.15 per share net profit but were shocked by losses of $0.74. Lyft also said first-quarter 2023 revenue would come in below analyst expectations. That saw Lyft’s share price dive on the company to raise capital to meet the minimum statutory requirement, as has the regulator’s decision to extend Metro Bank’s ‘grace period’ until 2025, meaning the threat of a heavily dilutive rights issue is off the table for now.

Even the most bearish analysts have finally thrown in the towel, with the last ‘sell’ recommendation being scrapped just over three months ago. [IC]

36% on 10 February to entirely wipe out year-to-date gains and led analysts at US broker Wedbush to call into question whether the company’s business model can scale in a profitable way.

It is ‘a winner take-all ride-share market with Uber (UBER:NYSE) the winner and Lyft looking like the major loser with a murky path forward,’ said analysts Daniel Ives and John Katsingris. [SF]