Why has Lyft stock dropped?

Lyft (ticker: LYFT) shares were down 7.8% in premarket trading after the company reported its second-quarter earnings late on Tuesday. While Lyft's quarterly losses narrowed, its revenue growth was considerably slower than Uber 's (UBER) as it seeks to compete on price.



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The pandemic initially walloped Lyft by drying up demand for ride-hailing services, a blow Uber was able to soften through an aggressive expansion in food delivery. That gave people a reason to continue using Uber's app even when they were stuck at home while Lyft fell out of favor.

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Out of 12 analysts, 1 (8.33%) are recommending LYFT as a Strong Buy, 3 (25%) are recommending LYFT as a Buy, 8 (66.67%) are recommending LYFT as a Hold, 0 (0%) are recommending LYFT as a Sell, and 0 (0%) are recommending LYFT as a Strong Sell. If you're new to stock investing, here's how to buy Lyft stock.

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On average, Wall Street analysts predict that Lyft's share price could reach $12.79 by Aug 14, 2024. The average Lyft stock price prediction forecasts a potential upside of 24.44% from the current LYFT share price of $10.28.

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Largest shareholders include Fmr Llc, Vanguard Group Inc, FBGRX - Fidelity Blue Chip Growth Fund, BlackRock Inc., VTSMX - Vanguard Total Stock Market Index Fund Investor Shares, Ubs Asset Management Americas Inc, NAESX - Vanguard Small-Cap Index Fund Investor Shares, Two Sigma Investments, Lp, Voloridge Investment ...

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Given Lyft's liquidity position and cash burn rate, I do not believe it will survive through 2024. Lyft may eventually find an activist or strategic buyer, but it may lack sufficient strategic value in today's economy.

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Now, the San Francisco-based company is facing an existential crisis as it trails its much larger competitor, Uber, amid ongoing questions about the long-term viability of ride-hailing as a business. Since the pandemic, some analysts have questioned whether Lyft can survive as an independent company.

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Uber dominates U.S. market share By April 2022, Uber sales exceeded their pre-pandemic levels and remained elevated throughout most months of 2022 and into 2023. Meanwhile, sales at Lyft are yet to reach their pre-pandemic levels as of July 2023.

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Lyft shares tanked after hours on Thursday after the company shared weak outlook for the next quarter. Lyft expects to make $975 million in revenue in the fiscal first quarter of 2023, lower than the $1.09 billion analysts anticipated, according to StreetAccount.

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Now, Lyft has abandoned shared rides, although Uber appears to be planning to expand them. But shared-ride products are still needed, especially when demand appears all at once in high volume. A common scenario: A plane lands at a small-city airport at midnight.

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On average, Uber paid its drivers about 6.2% more per hour than Lyftin 2022: $21.14 versus Lyft's $19.90, according to the ride-hailing business site Gridwise.

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As of 2022, Uber has a 71% share of sales in the U.S. rideshare market, whereas Lyft only has 29%. However, both have seen significant sales increases since 2021. As of January 2022, Uber's sales are up 84%, and Lyft sales are up 62% year-over-year.

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Uber's third-quarter commentary that it's reached an inflection point for expanding profitability over the coming quarters and rising investor expectations have driven a 34% share price rebound since the start of 2023, trimming the stock's decline over the past year to 4.2% (see chart below).

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Money: Uber raised capital much faster than Lyft. When Lyft made $250 million in funding, Uber made five times that at 1.2 billion. This capital allows Uber to expand faster and take risks that Lyft can't afford to.

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Google parent company Alphabet has more than doubled its money on Lyft to $1 billion in just 17 months. Between its investments in Uber and Lyft, Alphabet owns a stake worth over $4 billion in ride hailing.

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