Lyft: Partnership with Waymo Keeps Firm Relevant but Doesn’t Change Its Lack of Network Effects

Key Morningstar Metrics for Lyft

• Fair Value Estimate: $15.00
• Morningstar Rating: ★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High

Lyft LYFT and Waymo have announced a partnership wherein Lyft’s fleet management arm, Flexdrive, will manage Waymo’s autonomous vehicles in Nashville in 2026. Under the agreement, riders still order on the Waymo app, but there are plans to dispatch on Lyft’s network later in 2026. Shares are up 12%.

Why it matters: The Waymo partnership helps Lyft stay relevant as it works to build a ride-hail network with durable unit economics. Unfortunately for Lyft, the agreement begins as a lower-margin fleet management task and involves higher expenditures, which can reduce returns on invested capital.

• We believe the deal is more symbolic than economically significant. Waymo had relied on self-operation and parnerships with Uber Technologies UBER, but now Lyft is at least in the mix. Still, this partnership feels less impressive than the immediate demand matching of Waymos on Uber’s app in Atlanta and Austin.

The bottom line: We maintain our $15 per share fair value estimate for Lyft, reflecting capex for a purpose-built AV fleet management facility and near-term margin pressure from fleet operations, balanced with margin expansion potential from removing human drivers.

• We believe Lyft is 35% overvalued, while Uber is roughly fairly valued. Lyft trades near 1.6 times its enterprise value to sales, versus Uber’s 3.9 times, leaving room for this spread to tighten in the near term on more positive news, but we still prefer Uber’s network over the long run.
• Lyft’s lack of network effects is shown by a core user base that is growing more slowly than Uber’s despite being only 14% the size and having only half the engagement of its rival platform. We don’t believe a single Waymo partnership makes much difference.