Lyft Inc. (LYFT) had a rough Wednesday, watching its shares tumble 17% after delivering fourth-quarter numbers that left Wall Street underwhelmed. The rideshare company posted revenue of $1.59 billion, a meaningful shortfall from the $1.75 billion analysts were expecting. On the bright side, adjusted earnings per share came in at 15 cents, topping the 12-cent consensus.

The mixed results tell an interesting story about where Lyft is placing its bets. Gross bookings rose 19% to $5.1 billion, and the active rider base expanded 18% to 29.2 million users. The company also announced a $1 billion stock repurchase program, a move clearly aimed at reassuring investors that management believes in its own future.

Looking ahead to the first quarter of 2026, Lyft is projecting gross bookings between $4.86 billion and $5.00 billion, which translates to year-over-year growth of 17% to 20%.

Wall Street Recalibrates Expectations

The analyst community responded swiftly with a round of price target cuts. Wedbush analyst Scott Devitt maintained his Underperform rating while slashing his price forecast from $16 to $13. Cantor Fitzgerald's Deepak Mathivanan kept his Neutral rating but dropped his target from $21 to $14. Needham analyst Bernie McTernan stuck with his Hold rating.

The Strategy Shift Behind the Numbers

Here's where things get interesting. According to Devitt at Wedbush, Lyft actually beat expectations on bookings growth, but total rides came in well below what the Street was hoping for. This wasn't an accident—the company deliberately pivoted away from chasing high ride volume and instead focused on more profitable trips.

That strategic shift helped boost Lyft's implied take rate above expectations and pushed adjusted EBITDA slightly ahead of consensus. But revenue still missed estimates, primarily due to a one-time charge related to changes in legal, tax, and regulatory reserves.

The first-quarter guidance Lyft offered was modest at best, with EBITDA expectations falling short of Wall Street's projections. While management believes premium services and higher-priced offerings can accelerate bookings growth throughout 2026, Devitt remains cautious about whether the company can actually hit its longer-term financial targets.

He also flagged intensifying competition in U.S. ridesharing and potential disruption from autonomous vehicles as material risks, especially since Lyft has less diversification compared to its larger rival.

Competition Pressures and Margin Questions

Mathivanan at Cantor Fitzgerald pointed out that ride growth decelerated by roughly three percentage points to 11% in the fourth quarter after stronger momentum earlier in 2025. He attributed the slowdown to heavier competition in lower average-order-value rides, plus Lyft's strategic emphasis on higher-margin premium offerings and mix effects from FREENOW and other initiatives.

Despite the deceleration, Lyft expects gross bookings growth to outpace rides growth in the first half of 2026. The company continues to project acceleration in North America and globally, banking on product launches and partnerships to drive momentum.

Lyft also reaffirmed its long-term 2027 adjusted EBITDA margin target of 4%, though Mathivanan acknowledged that hitting this goal would require meaningful annual margin expansion from here.

The 2027 Targets Face Execution Hurdles

McTernan at Needham noted that first-quarter margins face a tough year-over-year comparison, though he expects incremental margins to improve as the year progresses. Still, he's running below Lyft's 2027 targets, arguing that the softer 2026 starting point makes those longer-term goals increasingly challenging to reach.

Management reaffirmed its ambition to hit $25 billion in bookings and $1 billion in adjusted EBITDA by 2027. Getting there would require a 16% bookings compound annual growth rate from 2025 levels and consistent annual margin expansion. McTernan questions whether Lyft can sustain mid-to-high teens growth through 2027 without making additional acquisitions.

On the autonomous vehicle front, Lyft continues positioning hybrid networks—combining human drivers with self-driving cars—as the winning model. McTernan believes lower pricing will be essential if autonomous vehicles are going to meaningfully expand the overall rideshare market.

Lyft shares closed down 16.97% in regular trading on Wednesday and slipped another 0.50% in after-hours action, finishing at $13.92.