Lyft Shares Sink as Tough Competition Takes a Toll on Bookings Forecast

Lyft Inc. (NASDAQ: LYFT) shares tumbled in extended trading on Tuesday after the ride-hailing platform offered a forecast for a key demand metric that came in below Wall Street's expectations. The company expects first-quarter gross bookings of around $4.05 billion to $4.2 billion, which was a bit below the estimated $4.24 billion. This news sent Lyft's stock price down by about 10% in after-hours trading.

Lyft's pricing strategy has been to match prices with its larger rival, Uber Technologies Inc. (NYSE: UBER), to grab more market share. This strategy has helped Lyft hit all-time highs in rides, driver hours, and market share. However, despite Lyft's competitive pricing, Uber still maintains a significant market share lead, accounting for 76% of observed U.S. rideshare spending in March 2024, compared to Lyft's 24%. This is likely due to Uber's larger scale and diversification, which allows it to compete more effectively.

Lyft's fourth-quarter revenue was at a record high, rising 26.6% to $1.55 billion, and was in line with the estimates of $1.56 billion. The company also recorded its first full year of positive free cash flow and profit in 2024. Its adjusted profit for the fourth quarter was 29 cents per share, well above estimates of 22 cents. However, the company's forecast for current-quarter adjusted core earnings of about $90 million to $95 million was slightly below expectations of $92.9 million.

Lyft's shares have been volatile in recent months, with the stock price fluctuating between $14 and $21. The company's market capitalization is currently around $59.7 billion. Analysts have a consensus "Buy" rating for Lyft's stock, with a price target of $17.84, which is an increase of 23.20% from the current stock price of $14.48.




Lyft's shares have been under pressure due to intense competition with Uber and concerns about the company's ability to maintain its market share. Despite Lyft's efforts to differentiate itself through competitive pricing and new features like the Price Lock service, Uber's larger scale and diversification have allowed it to maintain a significant market share lead. Lyft's shares may continue to face headwinds as the company navigates the competitive ride-hailing landscape and seeks to sustain its mid-teens percentage year-over-year rides growth. Investors should closely monitor Lyft's progress and remain cautious about the company's prospects in the face of fierce competition.