Lyft's stock tumbles as rider numbers and revenue suffer big misses

By Bill Peters

CEO says Lyft will put more autonomous vehicles on the streets this year as it tries to keep up with Uber against a shaky ride-hailing and delivery backdrop

Lyft reported quarterly earnings on Tuesday.

Shares of Lyft were headed for their worst day in nearly two years on Wednesday, after the ride-hailing platform reported rider numbers and revenue that missed expectations by wide margins, while management looked to shift investor focus by talking up 2026 as a big year for autonomous vehicles.

Lyft's (LYFT) downbeat results come less than a week after rival Uber Technologies (UBER) released another disappointing earnings report, while also trying to dispel fears of the growing threat from robotaxis by saying more AVs were a good thing for the ride-hailing market.

Lyft's stock tumbled 11.8% in recent morning trading toward a six-month low. It was also on track for the biggest one-day drop since it shed 17.2% on Aug. 7, 2024.

The company reported late Tuesday a 18.2% rise in fourth-quarter active riders from a year ago, to 29.2 million. However, that was below the average analyst estimate compiled by FactSet of 29.5 million. The number of rides increased 11.4% to 243.5 million but missed expectations for 256.6 million.

The margin of the active-rider miss was the widest since the third quarter of 2022, according to FactSet data, while the miss in the number of rides was the widest since the third quarter of 2023.

Revenue grew 2.7% from a year ago to $1.59 billion, to miss expectations for $1.75 billion by the widest margin in at least five years, based on available FactSet data going back to the fourth quarter of 2020.

Meanwhile, net income jumped to $2.56 billion from $46.1 million, due to the release of the valuation allowance on federal and certain state deferred tax assets.

Looking ahead, Lyft said it expects first-quarter gross bookings - or the total dollar value of the transactions made on the platform, excluding tips for drivers - of between $4.86 billion and $5 billion, up from $4.16 billion a year ago and in line with the FactSet consensus for $4.93 billion.

Lyft's stock has gained 3.3% over the past 12 months, to outperform the 5.4% decline in Uber shares over the same time. But Lyft's results and forecast arrived as some analysts worry about the state of the market for ride-hailing and food delivery, as consumers stay cautious on spending and as autonomous vehicles threaten to disrupt how people get around.

In Lyft's earnings release on Tuesday, CEO David Risher said that 2026 would be "the year of the AV with deployments in the U.S. and overseas." Investors believe autonomous vehicles will play a bigger role for the ride-hailing industry in the years ahead.

The company said that to reflect its confidence in its growth potential, it was announcing a new $1 billion share-repurchasing program, which represents about 17% of Lyft's current market capitalization of $5.93 billion.

But Wedbush analyst Scott Devitt, in downgrading Lyft in December, said investors had lost some confidence in Lyft's ability to hit longer-term targets. He also said that autonomous-vehicle operators might not want to work with the ride-hailing apps as more of their self-driving cars hit the streets.

Despite attempts by Lyft and Uber to assuage AV worries, Melius Research analyst Conor Cunningham wrote in a Wednesday note that investor sentiment toward the ride-hailing business is increasingly bearish as competition grows.

"Lyft clearly has its head down on its own strategy, focusing on international growth, building up products and introducing AVs to its own platform, but we've yet to hear a compelling case against the bear thesis out there today," Cunningham wrote.

To better compete with Uber, Lyft has collaborated with May Mobility and Tensor in an effort to put more autonomous vehicles on roads. Lyft, in prepared remarks, said it was preparing for AV deployments this year in London as well as in Dallas, Nashville and elsewhere.

Lyft has also partnered with companies like DoorDash (DASH) and United Airlines (UAL) to offer riders incentives such as discounts and airline miles. It has tried to move into luxury-tier services via the acquisition of a chauffeuring company and to expand abroad. The company has also launched services geared specifically toward teenagers, families and older adults.

-Bill Peters

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

02-11-26 1020ET