$1 billion buyback can't hide the decline: Lyft (LYFT.US) Q4 revenue falls short of expectations, Q1 guidance is weak, and the market votes with their feet on the self-driving vision.

Lyft Inc (LYFT.US) released its fourth quarter and full year 2025 financial report on February 10, 2026, showcasing a dramatic financial picture. Despite recording a record-breaking $27.6 billion net profit in the quarter, this huge number is mainly due to a release of a tax asset valuation reserve of up to $29 billion, rather than pure operating growth. On a core business level, Lyft's fourth quarter revenue was $15.9 billion, a 2.6% year-over-year increase, but did not meet analysts' expectations of $1.76 billion. Due to lower than expected revenue and soft performance guidance for the first quarter of 2026, the company's stock price plummeted by about 15% in after-hours trading. In terms of operational data, Lyft showed strong market penetration in 2025. Active passenger numbers in the fourth quarter increased by 18% year-over-year to a record-breaking 29.2 million people; total bookings for the year reached $18.5 billion, a 15% increase. Despite the increase in activity, revenue was directly impacted by $168 million in legal and regulatory reserve expenses. Additionally, the company generated $1.12 billion in free cash flow in 2025, providing sufficient confidence for its board to approve a new $1 billion stock buyback plan, aimed at conveying management's long-term value to the market. Looking ahead to 2026, Lyft CEO David Risher positioned the company as a "year of transformation", focusing on the deep deployment of autonomous driving (AV) technology. The company plans to build a "hybrid network" consisting of human drivers and autonomous vehicles through partnerships with Waymo and others, with the goal of reducing costs by approximately 20% per mile by 2030. However, in the short term, the company still faces challenges, such as disruptions to orders from winter storms in the Eastern United States, and a sharp increase in insurance costs due to California driver-related laws. These pressures resulted in an adjusted EBITDA guidance of $120 million to $140 million for the first quarter of 2026, slightly below market expectations. Lyft's stock closed at $16.85 on Tuesday, falling over 17% in after-hours trading as of writing. It is worth noting that as of Tuesday's close, the stock has declined by 13% year-to-date. Despite short-term pressure on the stock price, Lyft executives remain optimistic about future growth. Lyft CEO David Risher said in a statement, "2025 was an incredible year of resurgence for Lyft." He added, "Looking ahead, we are entering a transformative phase for Lyft - 2026 will be the year of autonomous vehicles, deployed in the United States and overseas." He referred to autonomous vehicle cooperation projects with Waymo in Nashville and with other companies in the UK. Competitor Uber Technologies, Inc. (UBER.US), which is much larger than Lyft, also released a mixed earnings report last week, indicating that efforts to grow beyond their core business in the US have not yet delivered the profits expected on Wall Street. For some bearish investors, the positive expansion of the Waymo network continues to bring uncertainty to Uber Technologies, Inc. and Lyft, as partnerships with autonomous taxi companies will take years to develop and grow profitably. Lyft's performance may also disappoint some investors who have been looking for clues as to whether the reduction in California insurance costs will lower prices and drive demand growth. The company also added on Tuesday that "broad consumer adoption takes time to materialize, and we now expect this to ramp up in the second half of the year." Company CFO Irene Bruhl stated that the company's "rigorous excellence in operations" has laid the groundwork for "further growth" and that the company is "progressing according to plan" towards achieving long-term financial goals. This modest guidance masks stronger booking performance during the holiday period. Lyft's total bookings in the fourth quarter increased by 19% to $5.1 billion, exceeding analysts' expectations of $5.06 billion. This is the largest increase since early 2024. This is also the first full quarter since the inclusion of the European ride-hailing app Freenow business acquired last year. During this period, Lyft's senior passenger base almost doubled with the promotion of the Lyft Silver product. Lyft Silver is a simplified version of its app designed for older users. According to Lyft, the product has now served hundreds of thousands of trips. The company also launched a new service allowing teenagers to ride without adult accompaniment. The company further deepened its partnership strategy to attract more customers. In November, the company began allowing United Airlines (UAL.US) passengers to earn miles by riding Lyft. Lyft also stated that, through the recent acquisition of TBR Global Chauffeuring, it will introduce higher value travel types such as black car and chauffeur services. The company stated in a release that it expects total bookings to continue to exceed the growth in the number of trips in the first half of this year.