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Lyft shares plunged roughly 15% in extended trading Tuesday after the company released fourth-quarter results that fell short of analyst expectations on revenue, active riders and total rides. The selloff underscores continued investor concerns about growth momentum and competitive pressures in the U.S. ride-hailing market.

While headline net income appeared strong due to accounting adjustments, the underlying operating performance painted a more cautious picture.

Revenue Miss Overshadows Solid Bookings Growth

For the fourth quarter, Lyft reported revenue of $1.59 billion, below Wall Street estimates of $1.76 billion. Sales increased 3% year over year, reflecting modest top-line growth in a period when investors were looking for stronger acceleration.

Gross bookings, a key measure of total rider spending on the platform before driver payouts and incentives, rose 19% year over year to $5.07 billion. That figure was largely in line with expectations and suggests continued demand resilience despite macroeconomic pressures.

Net income came in at approximately $2.76 billion, or $6.72 per share. However, earnings per share were not directly comparable with analyst estimates due to accounting items and adjustments. Investors focused instead on revenue growth and forward guidance, both of which disappointed.

Lyft guided for adjusted EBITDA in the current quarter to range between $120 million and $140 million, slightly below analyst expectations of nearly $140 million at the midpoint. The softer outlook reinforced concerns that profitability improvements may be uneven in the near term.

Rider and Ride Metrics Miss Expectations

Operational data for the quarter also fell short of projections.

Active riders totaled 29.2 million during the fourth quarter, below estimates of 29.5 million. While the shortfall appears small numerically, user growth remains a closely watched indicator for ride-sharing platforms competing for market share.

Total rides reached 243.5 million, missing expectations of 256.6 million. That gap of more than 13 million rides suggests softer-than-anticipated engagement levels during the typically strong holiday quarter.

Lyft continues to compete with larger rival Uber in a market that has largely matured in major U.S. cities. Growth increasingly depends on pricing dynamics, driver availability, product innovation and expansion into adjacent services such as bike-sharing and corporate travel programs.

Insurance Reform and Pricing Strategy

The company highlighted recent legislative changes in California that reduced insurance costs for ride-sharing operators. Lower insurance expenses have enabled Lyft to reduce ride prices in certain markets.

Management indicated that while lower fares are expected to stimulate demand over time, the impact will likely be weighted toward the second half of the year. Consumer adoption and behavioral shifts typically lag price adjustments, meaning the full benefit may not materialize immediately.

California remains one of Lyft’s largest and most strategically important markets, so cost structure improvements there could meaningfully influence margins if demand accelerates.

Capital Allocation and Buyback Plan

Despite the mixed results, Lyft’s board approved up to $1 billion in additional share repurchases. The buyback authorization signals management’s confidence in the company’s long-term trajectory and provides support for the stock during periods of volatility.

Share repurchases can enhance earnings per share by reducing the total number of outstanding shares, though their effectiveness ultimately depends on sustained operating performance.

Lyft has been focused on improving free cash flow and maintaining balance sheet flexibility. The company ended previous quarters with billions in cash and short-term investments, giving it room to return capital to shareholders while continuing to invest in product development and driver incentives.

Market Reaction and Outlook

The 15% drop in after-hours trading reflects heightened sensitivity among investors to revenue growth and user trends in the competitive mobility sector. With revenue growing only 3% year over year and rider metrics underperforming expectations, the market appears to be demanding clearer evidence of sustained expansion.

Looking ahead, analysts will closely monitor first-quarter adjusted EBITDA performance, rider growth trends and the real-world impact of lower insurance costs in California. Additionally, broader economic conditions, including consumer spending patterns and fuel prices, will continue to influence ride-sharing demand.

While Lyft has made progress on profitability and bookings growth, the latest results suggest that accelerating top-line expansion and rider engagement remains critical to restoring investor confidence and supporting long-term stock performance.