Lyft (NASDAQ:LYFT) shares have fallen sharply following the company’s latest quarterly report, despite delivering record profitability and announcing a substantial $1 billion share repurchase program. The stock is down this week after management provided guidance below Wall Street expectations, largely due to operational disruptions caused by severe winter storms.
This decline comes after a challenging period for Lyft stock, which has lost 50% of its value from its 52-week high. Investors are now asking whether the recent selloff represents an overreaction to temporary setbacks or a potential buying opportunity. With the stock trading at attractive multiples relative to peers, Lyft may be too cheap for long-term, value-oriented investors to ignore.
About Lyft Stock
Lyft operates one of the largest ride-sharing platforms in North America, connecting drivers and passengers through its mobile app. The company provides a variety of services, including standard rides, shared rides, and premium options, while also expanding into micromobility solutions such as bikes and scooters. Based in San Francisco, California, Lyft competes primarily with Uber Technologies (NASDAQ:UBER) in a sector facing regulatory hurdles, driver shortages, and economic pressures that affect discretionary spending.
Since its IPO in 2019 at $72 per share, Lyft stock has fallen roughly 82%, reflecting years of operational losses and market volatility. In 2026, the stock is down about 33% year-to-date (YTD), underperforming the S&P 500 (NYSEARCA:SPY), which has posted modest gains. This lag demonstrates investor caution despite broader market optimism.
Valuation metrics indicate that Lyft stock may now be attractive. Its trailing price-to-earnings (P/E) ratio sits at 48, slightly above its historical average of 45 but higher than the transportation industry average of 39. However, the forward P/E of 25 times is below the industry average of 29, signaling expectations of stronger future earnings growth. Meanwhile, Lyft’s price-to-sales (P/S) ratio of 1.07 is below the industry average of 1.5, and the PEG ratio of 1.05 further suggests undervaluation relative to growth prospects.
Lyft Posts Another Strong Quarter
In Q4 2025, Lyft achieved significant operational milestones despite challenging conditions. Gross bookings reached $5.1 billion, up 19% year-over-year (YOY) and slightly above analyst estimates of $5.06 billion. Active riders increased 18% YOY to 51.3 million, while the company facilitated a record 946 million rides. Adjusted EBITDA surged 37% YOY to $154.1 million, surpassing consensus estimates of $147.1 million and marking the most profitable quarter in the company’s history.
Adjusted EPS came in at $0.16, exceeding the consensus of $0.12 by 33%, although reported EPS showed a $0.20 loss due to one-time items. Revenue was $1.59 billion, up 3% YOY but below the expected $1.76 billion. When accounting for a $168 million negative impact from legal, tax, and regulatory reserves, revenue would have been approximately $1.8 billion, demonstrating underlying strength.
This strong operational performance continues a trend of exceeding EPS expectations for four consecutive quarters. Lyft has consistently grown rider engagement and operational efficiency, with driver hours reaching record levels for 12 straight quarters.
$1 Billion Buyback Highlights Confidence
Lyft’s announcement of a $1 billion share repurchase program signals confidence from management in both the company’s fundamentals and current valuation. The buyback program is designed to return capital to shareholders while potentially boosting earnings per share over time.
However, guidance for Q1 2026 disappointed the market, with adjusted EBITDA projected between $120 million and $140 million, below the $140 million expected. Management attributed the shortfall to severe winter weather disruptions and seasonal operating costs. Despite this, Lyft reported free cash flow of $1.12 billion for full-year 2025, exceeding estimates and providing ample financial flexibility for continued growth initiatives.
Analyst Outlook on Lyft Stock
Analysts maintain a cautiously optimistic view on LYFT stock. Coverage from 38 analysts reflects a “Moderate Buy” consensus. Ratings include nine “Strong Buy” recommendations, 26 “Hold” ratings, one “Moderate Buy,” one “Moderate Sell,” and one “Strong Sell.”
The mean price target of $22.64 suggests potential upside of approximately 74% from current levels. Analysts cite Lyft’s strong profitability, international expansion opportunities, and technology initiatives—including autonomous vehicle integration—as catalysts for future growth. This optimism underscores the idea that the current selloff may provide an attractive entry point for long-term investors willing to tolerate near-term volatility.
Lyft’s Competitive Position
Lyft continues to differentiate itself in the competitive ride-sharing market through operational efficiency, strategic partnerships, and customer engagement. Its emphasis on driver retention, loyalty programs, and diversified mobility offerings positions the company well against Uber Technologies (NASDAQ:UBER) and other competitors.
Despite macroeconomic headwinds such as inflationary pressures on discretionary spending and labor costs, Lyft’s consistent growth in rider engagement and profitability demonstrates resilience. The company’s ongoing investments in technology, platform enhancements, and expansion into micromobility and potentially autonomous vehicles further reinforce its long-term growth trajectory.
Is Lyft Stock Too Cheap to Ignore?
With LYFT stock trading at levels below historical highs and showing strong fundamentals, investors may view the recent drop as an opportunity. While seasonal disruptions and short-term guidance miss drove the decline, the company’s long-term growth story remains intact.
Key factors supporting a buy-the-dip thesis include robust earnings performance, increasing rider engagement, a $1 billion buyback program, and attractive forward valuation multiples relative to peers. Analysts’ optimistic price targets indicate potential upside of more than 70%, highlighting the stock’s appeal to investors seeking growth at a reasonable price.
In summary, Lyft’s combination of record profitability, operational momentum, and strategic capital allocation may make it an attractive investment opportunity for patient investors. While near-term volatility may continue, the stock’s fundamentals suggest a meaningful upside potential for those willing to buy the dip.
Featured Image: Megapixl
