Lyft's Q1 Forecast Disappoints, Shares Tumble
Lyft shares plummeted 12.5% in premarket trading on Wednesday following the company's cautious gross bookings forecast for Q1. The ride-hailing firm faces intense competition from Uber Technologies and has struggled with external factors such as wildfires and severe weather in key markets.
"Lyft's ability to maintain growth while improving profitability remains uncertain," noted Evercore ISI analysts. Several brokerages have lowered their Lyft price targets, with the median PT now at $18.
Morningstar analysts expressed concern about Lyft's weakening network effects, suggesting a negative feedback loop where declining demand reduces incentives for drivers to participate, leading to poorer app performance and user migration to competitors.
Lyft projected Q1 gross bookings between $4.05 billion and $4.20 billion, below analysts' expectations of $4.26 billion. Uber had also forecasted lower-than-anticipated bookings for the quarter.
Despite partnering with Marubeni to introduce self-driving robotaxis in Dallas in 2026, Lyft's shares have underperformed in the past year, dropping 13.94% in 2024. However, they have gained 11.55% so far in 2023.
Lyft's 12-month forward P/E ratio of 13.8 remains significantly lower than Uber's 30, indicating potential valuation upside for the former.