Lyft Stock Downgraded On Autonomous Vehicle Risk From Waymo, Tesla Competition

BofA Securities analyst Michael McGovern downgraded Lyft, Inc’s LYFT rating to Underperform from Buy and cut the price forecast to $10.50 from $17.50 on Thursday.

The stock is trading lower on Thursday. The rerating reflects the substantial autonomous vehicle risk, especially Waymo’s rapid expansion in San Francisco and Los Angeles, and the lack of scalable autonomous vehicle partnerships that are launching in the near-term for Lyft.

Also Read: Uber and Lyft Adapt Robotaxi Strategy to Compete in Tesla and Waymo’s Space

McGovern noted Lyft’s long-term potential in the autonomous vehicle ecosystem, but given its still-nascent partnerships, the analyst lost confidence in the near-term upside.

Lyft is well positioned with 20 million users, growing 10%, plus solid ride frequency. Still, recent pricing headwinds likely impact margins, as data from Bloomberg Second Measure suggests that the average transaction value was still down in March.

McGovern initiated Lyft at Underperform in 2022 and upgraded to Buy post its 2024 Analyst Day on the expectation that Lyft could limit share loss and strengthen margins. The long-term margin outlook seemed conservative compared to Uber Technologies, Inc UBER.

Results have been mixed, with recent bookings and margin softness suggesting growth may need to reaccelerate and incremental margins improve to meet the analyst day guide.

Lyft is more exposed to Waymo versus Uber, likely generating 20%+ of bookings in California, versus Uber at less than 10%.

McGovern noted that Waymo could launch rides to San Francisco International Airport (SFO) this year or next, which would be a significant negative catalyst.

Waymo is also testing and launching other cities, but San Francisco and Los Angeles are significant for Lyft given its higher West Coast mix.

Waymo still only has 50% utilization, which could lend itself to expanded partnerships. However, with Tesla Inc TSLA launching in Texas and California, autonomous vehicle competition could grow and drive additional pricing pressure.

For fiscal 2025, McGovern reduced bookings by 2% on lower Bookings per Ride. The analyst projected $491 million for EBITDA versus $547 million prior (now below Street at $501 million in fiscal 2025 EBITDA).

Price Action: LYFT stock is down 11.10% at $11.51 at the last check on Thursday.

Read Next: