Feb 11 (Reuters) - Lyft's shares tumbled 18% in premarket trading on Wednesday, as slowing ride growth cast doubt on the company's ability to deliver on its long-term profitability targets.
Ride growth, a crucial measure of marketplace strength, has slowed in the face of persistent competitive pressure from larger rival Uber despite Lyft's margin gains, international expansion and a new $1 billion buyback.
Lyft forecast a weaker-than-expected adjusted core profit for the first quarter, hurt by harsh
U.S. winter weather and seasonal costs, and posted an unexpected operating loss for 2025.
Over the past two years, the ride-hailing platform has made progress on profitability and cash flow, but analysts say the next phase of its turnaround will depend on executing more complex growth initiatives to sustain ride momentum against Uber's scale.
"To achieve its 2027 target of 4% EBITDA margin, Lyft needs to execute on its premiumization strategy while integrating newer adjacencies and scaling white-glove chauffeuring. These are execution-heavy initiatives," said Evercore ISI analyst Mark Mahaney.
Combined with investments in autonomous vehicles, those efforts increase operational complexity and upfront costs, creating the risk that margins could come under pressure if growth does not reaccelerate, analysts said.
Lyft completed 945.5 million rides in 2025, missing the Visible Alpha estimate of 958.4 million. In the fourth quarter, typically a seasonally strong period for ride-hailing demand, the company logged 243.5 million rides, below market expectations of 256.3 million.
Ride expansion has also slowed on an annual basis. Growth decelerated from 18.5% in 2023 to 14.2% in 2025, raising questions about the pace of demand gains in North America.
To offset slower domestic growth, Lyft expanded into Europe last year through its Freenow acquisition, exposing the company to new international markets and reducing its reliance on North America.
Despite its shares underperforming Uber, Lyft trades at around 23.7 times its expected earnings, versus 20.8 times for the bigger ride-hailing firm.
(Reporting by Kanishka Ajmera and Akash Sriram in Bengaluru; Editing by Arun Koyyur and Maju Samuel)
