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Lyft (LYFT) is surging to multi-month highs, driven by a confluence of positive developments despite missing 1Q25 EPS and revenue expectations. The rally is fueled by Engine Capital's withdrawal of its board nominations, ending a contentious proxy battle, LYFT's expanded $750 mln share buyback program, and a better-than-expected Q2 forecast for gross bookings and adjusted EBITDA. LYFT's downside Q1 results also come against low expectations following Uber's (UBER) disappointing Q1 earnings report on May 7 that included a slight gross bookings miss, putting U.S. demand concerns under the spotlight.

• In Q1, gross bookings reached $4.16 bln, up 13.5% yr/yr and slightly exceeding expectations, while rides hit a record 218.4 mln, up 16% yr/yr, reflecting strong demand across commute, weekend, evening, and airport trips. Enhanced driver retention via LYFT's 70% fare guarantee and rider-focused features like faster ETAs, which reduced wait times by 10% yr/yr, supported the outperformance for these metrics.
• LYFT's competitive pricing strategy, including a reduction in base fares to align with UberX pricing, boosted ride volume and active riders, indicating market share gains in key U.S. cities. However, this pricing pressure modestly crimped revenue per ride ($6.64 vs. $6.80 in 1Q24), contributing to the small revenue miss.
• Profitability continues to improve significantly for LYFT with adjusted EBITDA jumping by 59% yr/yr to $106.5 mln. The company also guided to Q2 adjusted EBITDA of $115-$130 mln, essentially matching analysts' expectations, and implying yr/yr growth of 26% at the high end of the range. Key drivers for the enhanced profitability include reduced insurance costs, higher driver hours and a healthy driver base, and cost discipline, as reflected by a manageable 10% increase in total costs and expenses.
• From a long-term perspective, LYFT's robotaxi progress remains a cornerstone of its growth strategy, although the company surprisingly didn't emphasize its robotaxi partnerships (Mobileye, May Mobility) during last night's earnings call. Instead, LYFT focused on its Q1 performance and highlighted its recent acquisition of FREENOW, a European multi-mobility app that marks the company's most significant expansion to date outside of North America. The addition of FREENOW, which has a taxi offering as its core service, will nearly double LYFT's total addressable market to more than 300 bln personal vehicle trips per year.

LYFT’s better-than-expected Q2 guidance, expanded $750 mln share repurchase program, and the resolution of Engine Capital’s proxy battle are propelling its stock sharply higher, reflecting renewed investor confidence. These tailwinds, alongside healthy gross bookings and profitability gains, position LYFT to navigate competitive pressures and capitalize on long-term opportunities like robotaxis.