By Mackenzie Tatananni

Lyft stock received a double downgrade from analysts at BofA Securities, with the analysts arguing that the company's efforts to break into the autonomous-vehicle market may have hit a speed bump.

BofA Securities analysts led by Michael McGovern downgraded shares of the ride-hailing app to Underperform from Buy and slashed the price target to $10.50, down from $17.50. Shares were falling 11% to $11.59, dragging along with the broader market as the stock slid on President Donald Trump's announcement on tariffs.

While Lyft has the potential to make ground in the AV space, it likely will occur over the long term, McGovern said. He pointed to a lack of scalable AV partnerships in the near future as well as Waymo's expansion into San Francisco and Los Angeles, which presents a significant headwind.

If Waymo begins offering rides to the San Francisco Airport any time in the next two years, this presents yet another negative catalyst, McGovern added. The Alphabet-owned driverless taxi company continues to scale aggressively, and most recently announced its plans to expand to Washington, D.C. in 2026.

While the Alphabet-owned competitor is testing in other cities as well, San Francisco and Los Angeles are crucial for Lyft given its higher West Coast mix, McGovern added.

In his view, Tesla's launch in California would drive further pricing pressure. The electric-vehicle maker received its first in a series of necessary permits from the state in March, but it is unclear how long it will take before the company's robotaxis hit the road.

While Lyft is well-positioned with 20 million users and solid ride frequency, recent pricing headwinds are likely to continue, McGovern said. This has led him to lose confidence in any near-term upside.

BofA Securities initiated coverage on Lyft at Underperform back in 2022 and upgraded to Buy after the company's 2024 Analyst Day, anticipating that Lyft could limit share loss and strengthen margins.

However, the firm's high hopes for Lyft haven't materialized. Results have been mixed, with recent bookings and margin softness suggesting growth may need to reaccelerate to meet expectations, McGovern noted.

Wall Street seems unsure where to stand on Lyft stock. Of 46 firms polled by FactSet, 30 rate the stock at Hold. Out of the remaining analysts, 15 rate the stock at Buy or the equivalent, while one rates it at Sell.

Lyft competitor Uber Technologies fell 4.7%.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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April 03, 2025 13:03 ET (17:03 GMT)

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