Lyft's stock experienced a significant downturn today after its fourth-quarter financial results failed to meet analyst expectations. This underperformance prompted Wedbush to lower its price target and maintain an "Underperform" rating, highlighting concerns over reduced ride growth, cautious future projections, and the ride-sharing company's ability to compete in the evolving mobility landscape.
In its fourth-quarter report, Lyft recorded an 18.6% year-over-year increase in bookings, reaching $5.1 billion. However, this figure still fell below what Wedbush analyst Scott Devitt had projected. The number of total rides grew by 11.4%, which was considerably lower than the Street's estimate of 17.3% and even below management's own forecast for mid-to-high teen growth. Additionally, revenue came in at $1.6 billion, a mere 2.7% increase from the previous year and approximately 9% below estimates, primarily due to a one-time legal, tax, and regulatory charge.
Following these results, Wedbush adjusted its price target for Lyft's shares from $16 to $13. The firm expressed reservations about the company's long-term prospects, particularly its capacity to achieve its stated objectives. Analysts also suggested that Lyft might be losing market share in the U.S. mobility sector to its primary competitor, Uber, noting that Uber's consolidated trips increased by 22% during the same period. This competitive pressure, combined with the lukewarm guidance, painted a challenging picture for investors.
Lyft's forecast for the first quarter also reflected a cautious outlook. The company anticipates gross bookings growth of 16.8% to 20.1%, generally aligning with market expectations. However, the projected adjusted EBITDA of $120 million to $140 million fell below the Street's midpoint estimate of $140 million. Management explained that ride growth would likely trail bookings growth as the company shifts its focus towards more premium services and higher-priced offerings, such as TBR Global Chauffeuring.
Beyond the immediate financial performance, Wedbush pointed out broader long-term risks for Lyft. These include the potential disruption from autonomous vehicles and the company's relatively concentrated business model. The firm believes that the market might be underestimating the significant negative impact that widespread adoption of autonomous vehicle technology could have on Lyft's valuation and overall business model. At the time of publication, Lyft shares were trading down by 16.85% at $14.01, reflecting investor concern over these factors.
The significant drop in Lyft's stock price underscores investor apprehension regarding its growth trajectory and market position. Despite an increase in bookings, the company's inability to meet revenue and ride growth projections, coupled with conservative guidance and competitive pressures from Uber, has led to a reevaluation of its future potential by financial analysts.