Can Lyft's Waymo Deal Really Change The Ride-Hailing Game?
News Summary
Lyft has partnered with Alphabet's Waymo for autonomous vehicle (AV) rides, aiming for profitability from day one and positioning itself for accelerated growth while challenging Uber's dominance in the ride-hailing market. Benchmark analyst Daniel L. Kurnos maintained a “Buy” rating on Lyft and raised his price target from $20 to $26, calling the partnership a breakthrough in the rideshare and AV space. He believes it ends Uber’s perceived monopoly and elevates Lyft’s standing in the industry. Kurnos highlighted that the deal is expected to be profitable per ride from day one and margin-accretive through Flexdrive and fleet management. Lyft will launch in a market where Waymo already leads, allowing for the testing of a dynamic supply algorithm. Furthermore, Lyft will invest $10-15 million in capital expenditures for facilities, anticipating a quick payback period. The analyst also noted that pending California legislation could save Lyft hundreds of millions in insurance costs, with most savings likely passed on to riders via lower prices to spur demand and scale benefits. Kurnos projects Lyft to generate $24 billion in gross bookings and $900 million in EBITDA by 2027, exceeding Street expectations of $830 million. He believes Lyft Media's potential is underestimated and could significantly contribute to nearing the $1 billion EBITDA target.
Background
Lyft and Uber are the two major competitors in the ride-hailing industry, with Uber typically holding a larger market share and having earlier experience with autonomous vehicle partnerships. Autonomous vehicle (AV) technology has been developing rapidly, with companies like Waymo (an Alphabet subsidiary) at the forefront. The ride-hailing business often faces high operational costs, including significant insurance expenses, making sustained profitability a key challenge for the sector. Lyft has been under pressure to improve its financial performance and strategic positioning against Uber.
In-Depth AI Insights
What are the underlying strategic implications of Lyft's