In This Article:
Key Points
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Lyft's business has improved significantly over the last three years.
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The ride-share company is expanding into Europe with its recently announced acquisition of FreeNow.
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It continues to add new features like Lyft Silver.
Lyft (NASDAQ: LYFT) has had a tough time on the public markets. Share prices of the ridesharing company, which has long been in the shadow of the larger Uber Technologies (NYSE: UBER), are down 77% since its IPO in 2019. Both ridesharing stocks were overpriced when they went public, and both tumbled when the pandemic started, but since then, their performances have diverged.
Uber stock has soared as the company has brought costs under control and delivered steady growth, reinforcing its competitive advantages. Based on its weak stock performance, you might expect to hear that Lyft lagged behind Uber in growth, but that isn't the case. Its revenue growth has been faster than Uber's over the last year. Lyft has now reported 16 straight quarters of double-digit percentage gross bookings growth.
It made strides on the bottom line as well. Last year, it reported a generally accepted accounting principles (GAAP) profit for the first time. In 2025's first quarter, Lyft reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $106.5 million, which was nearly double what it booked a year before. Lyft also reported free cash flow over the last four quarters of $919.9 million due in part to a large increase in insurance reserves. With Lyft's market cap at less than $7 billion, the stock trades for less than 8 times trailing free cash flow.
That's one good reason to bet that Lyft can double over the next three years. Let's take a look at a couple of others.
Lyft is expanding
Unlike Uber, Lyft has historically only operated in North America, but the company made a big move in April, paying $200 million to acquire FreeNow, a ride-share platform in Europe that was owned by BMW and Mercedes-Benz.
The move essentially doubles Lyft's addressable market by giving it exposure to nine countries and more than 150 cities. The deal, which is expected to close in the second half of the year, should increase the company's annualized gross bookings by about $1 billion. That's less than 10% of Lyft's current gross bookings, but the growth opportunity is what's most valuable here. Additionally, FreeNow's revenue increased 13% in 2024, and the operation has reached break-even.
FreeNow will continue to operate under its own brand, but Lyft plans to roll out new benefits for riders and drivers and integrate the apps so that riders can use either one in North America or Europe.