(Reuters) - Lyft shares slumped 12.5% in premarket trading on Wednesday after the company forecast weak gross bookings for the first quarter, as it battles with larger rival Uber Technologies to attract more riders.
The ride-hailing platform has been aggressively working on luring customers away from Uber through competitive pricing and new features, but faced challenges from wildfires and extreme weather in some crucial markets.
"The key question for Lyft remains the company's ability to sustain top-line growth while ramping profitability," Evercore ISI analysts said.
At least six brokerages cut their price targets on the Lyft stock, a day after the company's fourth-quarter results, bringing the median PT to $18, as per data compiled by LSEG.
Morningstar analysts cautioned that Lyft's weakening network effects could be a sign of a negative feedback loop where softening demand, lowers the incentive for "supply/drivers to remain on the network, which can result in worsening app performance and ultimately pushes users toward the competitor."
Lyft on Tuesday forecast gross bookings between $4.05 billion and $4.20 billion for the first quarter, below Wall Street estimates of $4.26 billion.
Last week, Uber too projected first-quarter gross bookings that were short of analysts' expectations.
Earlier this week, Lyft announced that it would partner with Japanese conglomerate Marubeni to roll out Mobileye powered fully autonomous robotaxis in Dallas, on its platform "as early as 2026."
Automakers and technology companies are funneling significant investments into driverless technology, betting on it as a key driver for future growth and transformation in mobility.
Lyft's 12-month forward price-to-earnings ratio is 13.8, compared to Uber's 30. In 2024, Lyft's shares fell 13.94%, while so far this year it has risen 11.55%.
(Reporting by Joel Jose in Bengaluru; Editing by Shailesh Kuber)
