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Investing.com -- Bank of America double-downgraded Lyft (NASDAQ:LYFT) to Underperform from Buy on Thursday, citing increased risks from autonomous vehicle (AV) competition, particularly from Waymo’s expansion in San Francisco and Los Angeles.
BofA states that while Lyft has long-term potential in the AV space, "given its still-nascent partnerships, we are losing confidence in near-term upside."
Lyft currently has a strong user base of 20 million, growing 10% year over year, but pricing challenges continue to impact margins.
According to BofA, data from Bloomberg Second Measure shows that "Avg. Transaction (JO:NTUJ) Value was still down Y/Y in March," suggesting ongoing pricing headwinds.
Additionally, Lyft’s higher exposure to the California mobility market compared to Uber (NYSE:UBER) could further pressure its market share.
"Lyft is more exposed to Waymo vs. Uber, likely generating 20%+ of bookings in CA, vs. Uber at less than 10%," BofA notes.
The firm expects that Waymo’s potential launch of airport rides to San Francisco International Airport "could be a significant negative catalyst," accelerating Lyft’s share losses in key West Coast markets. BofA also highlights Tesla’s AV expansion in Texas and California as another competitive threat.
As a result, BofA has lowered its FY25 EBITDA forecast for Lyft to $491 million, down from a prior estimate of $547 million. It also cut its price target for the stock to $10.50 from $17.50, citing "substantial terminal/long-term AV risk" and a reduced valuation multiple.
The firm does note that partnerships with companies like Waymo or Zoox could provide upside, but in the near term, the AV overhang is expected to weigh on Lyft’s performance.