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Lyft (LYFT) drove past Q4 EPS and revenue expectations while reaching all-time highs for rides and riders, but shares are crashing lower after the rideshare company delivered soft Gross Bookings and adjusted EBITDA guidance for 1Q25. While demand remains healthy, LYFT is now engaged in a price war with its larger rival, Uber (UBER), putting downward pressure on both of those key metrics. According to CFO Erin Brewer, lower pricing dynamics began late in Q4 and have continued into 1Q25, resulting in LYFT guiding for a slowdown in Gross Bookings growth to 10-14% compared to 15% in Q4.

• Clawing back market share from UBER through product improvements and new services has been focal point under CEO David Risher. To that end, LYFT has had some good success as the company ended January with its highest market share since 2022. Newer offerings such as Price Lock, which was launched last fall, and Lyft SUV have provided the company with a boost. Additionally, the company believes that its average ETAs were the fastest in the industry in Q4.
• UBER, though, appears to be hitting back by lowering rides prices, forcing LYFT to follow suit. The drop in prices is also hitting at an inopportune time -- Q1 is the seasonally slowest quarter, characterized by fewer and shorter/less profitable rides. Making matters worse, LYFT is also contending with the loss of its partnership with Delta Air Lines (DAL), which will end on April 7. This will negatively impact Gross Bookings growth by approximately 2 ppts starting in 2Q25.
• Despite the price declines and accompanying deceleration in Gross Bookings growth, the company's Q1 adjusted EBITDA guidance of $90-$95 mln was still in-line with expectations. Helping to offset the price headwinds, LYFT has seen a favorable response to its newer offerings, which carry higher margins. Furthermore, the company has maintained cost discipline, achieving more than 100 bps of fixed cost leverage in FY24, and a large stable of drivers has allowed it to keep driver incentives in check.

LYFT delivered solid Q4 results, but that is being overshadowed by the company's disappointing guidance and rising concerns about a price war with UBER. From a longer-term perspective, LYFT is positioning itself to become a major player in the robotaxi market, reiterating that it plans to launch robotaxi services in Atlanta this year, followed by Dallas in 2026.