Lyft Losing War With Uber? Stock Heading Toward Worst Day Ever

Topline

Lyft shares cratered Friday as the company’s earnings fell far short of expectations, leading several analysts to declare its war against long-time ridesharing nemesis Uber all but over.

Uber is far better-positioned to emerge victorious from the ridesharing battle, according to Wall … [+] Street.

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Key Facts

In its quarterly earnings report after Thursday’s market close, Lyft disclosed a $0.76 loss per share in the last three months of 2022, compared to consensus estimates of a $0.13 per share profit in the period.

Lyft also expects about $975 million in revenue in the first quarter, also far below analyst expectations, as Lyft’s financial growth grinds to a halt.

Wall Street reacted strongly to the news, with at least nine firms, including Truist, Wedbush and Wells Fargo, downgrading Lyft stock from a buy to a hold, and a host of other firms slashing its price target for the stock, according to FactSet.

The stock sank 36% to $10.34 as of 12:30 p.m. EST, flirting with its all-time low of just below $10 in what would be Lyft’s worst daily loss in its four-year trading history.

Lyft’s quarterly financials “left investors with more questions than answers,” according to Deutsche Bank analyst Benjamin Black, assessing long-time rival Uber “has emerged from the pandemic stronger” than Lyft.

Surprising Fact

Lyft has failed to attract the same number of customers as before the pandemic, with its 20.4 million active riders last quarter falling short of its 22.9 million customers in the last quarter of 2019. Uber’s monthly active users have grown by 18% in the period, per FactSet.

Crucial Quote

In a Friday note to clients, Wedbush’s Dan Ives said Lyft’s call ranked among the three worst earnings calls he’s ever heard, adding it appears “management is trying to play darts blindfolded with the expense structure” with a profit outlook that “was a debacle for the ages.” Ives concurred with Black’s assessment of the “winner-take-all rideshare market,” saying Lyft appears to be “the major loser with a murky path forward.”

Key Background

Lyft went public in March 2019 at $72 per share and a $24 billion valuation, about six times as much as its $3.8 billion market capitalization Friday. Shares fell 74% in 2022 amid a broader albeit less severe market downturn. Lyft’s dismal earnings report came a day after Uber reported its “strongest quarter ever,” according to its CEO Dara Khosrowshahi, beating consensus estimates on both sales and profits.

What To Watch For

How Lyft proceeds amid worsening sentiments on Wall Street. A sale is Lyft’s “best path” forward, according to Ives, while New Street Research analyst Pierre Ferragu previously suggested a merger with DoorDash, creating a rideshareing and food delivery hybrid akin to Uber.