Lyft Shares Drop 6% Following Disappointing Q4 Results and Lower Guidance

Lyft Shares Fall 6% on Weak Q4 Results and Lowered Bookings Guidance

Lyft shares tumbled by 6% after the ride-sharing company reported disappointing fourth-quarter results and lowered guidance for future bookings. The company is under pressure as it adjusts its pricing strategy to remain competitive.

Lyft’s revenue for Q4 was $1.55 billion, slightly missing analysts’ expectations of $1.56 billion, though it represented a 27% increase compared to $1.22 billion in the same quarter last year.

Bookings, a key performance metric representing the total charges posed to customers for rides and services, came in at $4.28 billion, falling short of the $4.32 billion FactSet estimate.

CEO David Risher: “I think what the future holds is great because it’s a huge market, and we’re doing a great job. We’ve got to figure out how to get the traders on the bus.”

Earnings and Guidance

Lyft managed to beat expectations for adjusted earnings, reporting 29 cents per share, compared to the 22 cents per share predicted by analysts. The adjusted earnings exclude amortization, compensation charges, and a one-time gain from terminating a lease.

However, the company provided a cautious outlook for gross bookings, expecting them to range between $4.05 billion and $4.20 billion, below the $4.24 billion forecasted by FactSet.

According to CFO Erin Brewer, Lyft lowered prices and offered discounts at the end of 2024 to remain competitive. The pricing strategy could result in a low single-digit decline in gross bookings.

Brewer also highlighted that the end of Lyft’s partnership with Delta Air Lines could reduce rides and gross bookings by 1% to 2% during the second quarter.

Competitive Landscape

Lyft is not alone in facing pricing pressures and mixed results. Last week, Uber shares also dropped after reporting mixed Q4 results and soft guidance. Uber warned that it may take years to fully build and commercialize its autonomous vehicle fleet.

Lyft, however, remains optimistic about its future in autonomous vehicles, announcing plans to launch Mobileye-powered self-driving taxis in Dallas by 2026.

Q4 Key Metrics:

Net Income: $62.8 million (15 cents per share) compared to a $26.3 million loss (7 cents per share) a year ago.

Active Riders: 24.7 million, exceeding the StreetAccount estimate of 24.6 million.

$500 Million Share Repurchase Plan: Announced alongside Q4 results to boost investor confidence.

Final Thoughts

Despite the revenue miss and cautious guidance, Lyft’s 27% year-over-year growth and increased active riders show some resilience. However, the ongoing pricing war with competitors like Uber, combined with macroeconomic pressures, will test Lyft’s ability to maintain profitability and market share.