UBER - Lyft crashes as weak guidance seen as 'debacle' downgrades ensue

Lyft ( NASDAQ: LYFT ) shares crashed more than 33% in premarket trading on Friday after the ride-sharing company said its first-quarter results would be sharply lower than anticipated, leading to several Wall Street firms to downgrade the stock.

Wedbush Securities analyst Dan Ives lowered his rating on Lyft ( LYFT ) to neutral from outperform, noting that the earnings call was one of the three worst he has head in 22 years of being an analyst on Wall Street, adding that the EBITDA outlook was a "debacle for the ages."

"There are serious questions around if Lyft's business model can scale from here in a profitable way and the company/Board faces some tough decisions ahead around the strategic path forward," Ives wrote in a note to clients. Ives also lowered his per-share price target to $13 from $17.

He added Uber Technologies ( NYSE: UBER ) is looking like the winner in ride-sharing and Lyft ( LYFT ) like a "major loser," with concerns over whether it can survive on its own or if it will need to be acquired.

Looking to the first-quarter, Lyft ( LYFT ) expects revenue to be approximately $975M, well below the $1.1B that analysts anticipate. It expects adjusted EBITDA between $5M and $15M.

In contrast, Uber ( UBER ) reported strong fourth-quarter results and guidance for 2023 earlier this week.

KeyBanc Capital Markets analyst Justin Patterson also cut his rating on Lyft ( LYFT ), lowering it to sector weight from overweight, stating the forecast casts "uncertainty" on whether the company is improving execution and about to turn a profit.

"With [approximately two-thirds of the quarter-over-quarter] decline in revenue coming from less Prime Time activity and reducing prices to match its competitor, we have more questions on whether revenue can achieve mid-to-high teens growth in [2023]," Patterson wrote.

JPMorgan analyst Doug Anmuth downgraded Lyft ( LYFT ) to neutral from overweight and slashed his per-share price target to $15 from $29, pointing out the U.S. ride-sharing industry is approaching full recovery in the U.S., but Lyft ( LYFT ) is not.

"We are concerned that it has become more difficult for Lyft to operate in a normalized environment, and we believe that Uber's network and scale benefits are increasingly weighing on Lyft's execution," Anmuth wrote.

Anmuth added the continued lag in the West Coast continues to "disproportionately" negatively impact Lyft ( LYFT ), with only 60% of the market recovered from levels prior to the pandemic.

During the fourth-quarter, Lyft ( LYFT ) generated $1.2B in revenue, up 23.7% year-over-year, topping estimates by $50M. It had 20.36M active riders, who generated on average $57.72 during the period, up 11.5% year-over-year.

It had an adjusted EBITDA loss of $248.3M and an adjusted net loss of $270.8M.

Earlier this week, investment firm Gordon Haskett downgraded Lyft ( LYFT ), citing the stock's sharp move since the start of 2023 and its preference for Uber Technologies ( UBER ).

Analysts are largely cautious on Lyft ( LYFT ). It has a HOLD rating from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates LYFT a HOLD .

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