Lyft (LYFT.US) partnering with Waymo, the "value" is in doubt. Wall Street cautiously views it: limited potential benefits from the cooperation.

Lyft (LYFT.US) announced on Wednesday that it will collaborate with Alphabet's Waymo for the first time, launching autonomous taxi services in Nashville next year. This collaboration will help Lyft better compete with its rival Uber Technologies, Inc. (UBER.US). The news caused Lyft's stock price to soar to its highest level in three years. However, the initial sharp reaction of Lyft's stock price, which surged nearly 28% in pre-market trading on Wednesday but closed with a 13% gain, reflects the market's transition from knee-jerk reaction to more thoughtful consideration of how much actual benefit this collaboration can bring to Lyft. Wall Street analysts have shown a more cautious attitude. They point out that while the deal is beneficial, it may not necessarily be exclusive. Under the arrangement, Waymo's orders will initially be processed through the Waymo app before transitioning to the Lyft platform. Analyst Michael McGovern from Bank of America Securities stated that due to Waymo's limited capacity in the early stages, the impact of this collaboration on Lyft's transaction volume growth may be limited. Additionally, McGovern expressed concerns that the collaboration between Lyft and Waymo in Nashville may not be exclusive. Even if the collaboration launches, Waymo One will still directly provide services, and it is unclear if Lyft will establish a "Waymo exclusive" service tier. Morgan Stanley analyst Brian Nowak stated, "This collaboration showcases the value of Lyft's network. Undeniably, in the early stages of autonomous driving development, this collaboration highlights Lyft's value in the ride-sharing network space." This analyst rated Lyft as "in line with the market." However, he also added, "Investors need to be aware that Nashville is only a small market for Lyft, and is not expected to have a significant impact on the company's financial model." He emphasized, "The key going forward will be execution and incremental performance," specifically whether Lyft can generate strong enough demand for Waymo's fleet and whether Lyft+Waymo can expand the overall addressable market for ride-sharing and increase the total number of ride-sharing orders. Regarding what the collaboration between Lyft and Waymo means for Uber Technologies, Inc., Brian Nowak believes that the key will be whether Uber Technologies, Inc. can continue to generate higher returns through Waymo vehicles in these markets and bring incremental value to the ride-sharing industry, which will determine its ability to attract more partners. McGovern's "underperforming the market" rating for Lyft reflects the ongoing risks brought by Uber Technologies, Inc.'s dominant position in the field. He stated, "Headwinds from pricing and market share loss may continue to weigh on market expectations for Lyft. Coming out of the pandemic, Uber Technologies, Inc. gained a significant share of the ride-sharing market, posing a challenge to Lyft in terms of scale."