"Comparison is the thief of joy": why did Lyft's stock fall after the report?

Weak quarterly results of Lyft cab service - the main competitor of Uber in the United States - disappointed the market. Despite a positive outlook for the third quarter and data on active expansion in Europe, the company's shares fell by 5.5% in extended trading after the release of the data on August 6. Uber presented a strong report on the same day, and according to a number of analysts, investors could compare the results of the two companies.

Lyft grew revenue 11% year over year to $1.59 billion in the second quarter, but that was slightly below analysts' consensus forecast of $1.61 billion, wrote MarketWatch. The number of rides rose 14% year over year to 234.8 million, but that result fell short of expectations as well. Total gross bookings reached about $4.5 billion, which was roughly in line with Wall Street estimates. At the same time, GAAP net income amounted to $0.10 per share, which is 2.5 times higher than the market expected.

In the third quarter, Lyft expects the number of rides to grow by 13-15%, with the consensus forecast from FactSet at 13.5%. The company expects gross bookings to be $4.65-4.8 billion - analysts were talking about $4.59 billion. Lyft attributes the anticipated growth in part to its purchase of German cab app Freenow. The deal closed on July 31 and should accelerate the U.S. company's entry into the European market, strengthen its international presence and allow it to develop premium services and robotaxis there.

After the publication of the report Lyft shares fell by 5.5% in extended trading. Trading on the premarket also began with a fall in quotations, but by the opening of the main session the company almost recovered its losses.  

"They say that comparison is the thief of joy, and for Lyft that became especially true today," said Andrew Rocco, equity strategist at Zacks Investment Research, in commentaryMarketWatch. - The stock went negative on the back of a strong report from Uber, which reported faster growth and better financials."

Uber said it increased revenue by 18% in the second quarter, and confidently beat market expectations. It attributed the strong results in part to synergies between its core businesses of ridesharing and delivery. However, Uber shares also fell in price immediately after his report, with the stock adding 0.8% in the Aug. 7 premarket.

Since the beginning of the year, the cost of Uber has increased by nearly 48%, while Lyft has only increased by 8.5%.

According to the Zacks analyst, Uber is winning the competition with Lyft due to its scale, flexible pricing, support from institutional investors and broad business diversification. He added that despite the good quarterly results, investors are wary of Lyft's slower growth rate, its smaller market share and limited activity in the robotaxi segment, which he estimates will be key to the entire industry in the future. "In terms of innovation, growth rate and price momentum, Lyft is an outsider," Rocco summarized.

Lyft is posting results amid its expanding international presence and efforts in robotaxis, a segment that is becoming increasingly competitive, points out MarketWatch. This week, the company announced a partnership with Baidu to launch unmanned rides in Europe - which could launch in Germany and the U.K. in 2026. 

The agreement could significantly strengthen the service's position in the global  market and impact revenue and earnings growth going forward, say more optimistic analysts at SimplyWallStreet. On top of the already recorded improvement in financial performance, the partnership supports Lyft's strategic vector of improving operational efficiency and margins.

The company is also testing autonomous cabs in Atlanta in partnership with May Mobility and is pushing cross-marketing programs with brands such as Hilton and United Airlines.

Over the past year, Lyft's total return to shareholders (including potential dividends) has been 38.93%, SimplyWallStreet reports. The vast majority of analysts recommend holding the company's securities in a portfolio s neutral rating. At the same time, the average target price of $17.2 implies the potential growth of quotations by 23% relative to the level of the last closing. 

For comparison, Wall Street expects Uber shares to grow by 16.5%, but 41 analysts out of 57 advise buying them. No one suggests selling. Lyft has two ratings that suggest a recommendation to get rid of its securities.

This article was AI-translated and verified by a human editor