No other than the American multinational financial services company Wells Fargo has warned Lyft that it is presently facing “mounting pricing pressure” that could affect its second-half earnings for this year, 2025.
Like Uber, Lyft has been benefiting from intense ride and tide volumes. However, perhaps not as big as Uber, that recently reported record-breaking market performance over the past few days. Ridesharing media are calling it, “all-time high.”
Uber’s stocks jumped nearly three percent at the start of this week, which is significant.
“Rideshare trip volumes should remain healthy near term,” the experts at Wells Fargo told Ridesharing Forum, while flagging that “incremental volumes increasingly mix shifting to lower-price use cases, pressuring incremental margins.”
For the second quarter of this year, the financial company has forecasted gross bookings near or touching the midpoint of the platform’s guidance at $4.5 billion, with “healthy volume growth (WFSe +15% y/y) partially offset by sustained pricing headwinds (WFSe -3% y/y).”
That means it’s generally performing well.
Furthermore, the bank also noticed how its daily active user growth increased to three percent year-over-year, thanks to the platform’s Price Lock feature and expansion into less dense markets.
However, what financial experts are worried about is that the trend may limit upside, saying, “See ride volumes driven by lower price use cases, limiting upside benefit to gross bookings.”
Now, taking a look at the third quarter, they anticipated gross bookings to be between $4.55 billion and $4.65 billion, and an EBITDA range of $125 million to $140 million, with downsides to consensus expectations.
EBITDA means Earnings Before Interest, Taxes, Depreciation, and Amortization.
“[We] believe incremental investments to expand rideshare use cases are driving healthy volumes and stable gross bookings,” Wells Fargo pointed out. “… but see sustained pricing headwinds and competition… weighing on incremental margins.”
The financial services company has estimated a 2.3 percent and 2.2 percent year-over-year decline in gross bookings for each ride in the third and the subsequent quarters of 2025, respectively, which are worse than consensus expectations.
They are also estimating 250 basis points in pricing headwinds from Price Lock, Canada expansion, and market mix.
The financial services company has, meanwhile, raised Lyft’s price target for Lyft from $13 to $14, citing several expansions across the sector, while maintaining an Equal Weight rating.
Somehow, Lyft has been provided with a buoy on which to base its future moves. Ridesharing Forum wishes Lyft the best of luck.
Meanwhile, in other Lyft news, Nashville airport officials have, at last, responded to the rule against Lyft and Uber drivers, prohibiting them from bringing and fetching tourists to and from the airport. This site has previously reported the outcry from these drivers.
However, there are no several stories about this response from airport officials as some media require a subscription to their story.
Loving what you’re reading? Share this article around online with your family and friends. You may also create that account today to participate in the discussion in this forum. Have a good week ahead!