Does LYFT's Gross Booking Growth Justify a Buy Decision on the Stock?

Lyft LYFT is benefiting from an uptick in driver supply. Highlighting the improvement in the ride share market, active riders increased in all four quarters of 2023, as well as in 2024 and all three quarters of 2025 so far. During the third quarter of 2025, gross bookings grew double digits year over year for the 18th consecutive quarter. This impressive growth in the key metric highlights the resilience and momentum of the company’s customer-friendly strategy.Given this impressive backdrop, let's take a sneak peek at LYFT’s third-quarter 2025 results, released last month.Highlights of LYFT’s Q3 ResultsQuarterly earnings per share of 26 cents lagged the Zacks Consensus Estimate of 30 cents and declined 10.3% from the year-ago quarter. Revenues of $1.68 billion missed the Zacks Consensus Estimate of $1.70 billion but increased 11% on a year-over-year basis.Gross bookings came in at $4.78 billion, marking a year-over-year increase of 16%, an all-time high. Rides growth surged 15% year over year to 248.8 million, the tenth consecutive quarter of double-digit growth. Active Riders grew 18% year over year to 28.7 million.Lyft’s adjusted EBITDA in the third quarter was $138.9 million, up 29% from the year-ago reported figure. The adjusted EBITDA margin (calculated as the percentage of gross bookings) was 2.9% compared with 2.6% in the prior-year quarter.The company’s earnings miss in the September quarter was the third in the last four quarters. LYFT’s earnings surpassed the consensus mark in the other quarter. The average beat is 1.2%.Lyft, Inc. Price and EPS Surprise Lyft, Inc. price-eps-surprise | Lyft, Inc. QuoteLYFT’s Upbeat Q4 OutlookFor the fourth quarter of 2025, Lyft anticipates year-over-year growth in rides in the mid-to-high teens, driven by industry-leading service levels, strong rider and driver growth and increased engagement.Gross bookings are anticipated to grow almost 17-20% year over year, reaching $5.01-$5.13 billion. Adjusted EBITDA is expected to be between $135 million and $155 million, and an adjusted EBITDA margin (calculated as a percentage of gross bookings) is projected to be in the range of 2.7-3%.Impressive Price PerformanceOver the past month, LYFT’s shares have gained in double digits, performing better than the Zacks Internet Services industry, rival Uber Technologies UBER and fellow industry player  DoorDash DASH.1-Month Price ComparisonImage Source: Zacks Investment ResearchFurther Reasons for Staying Bullish on LYFT StockLyft’s AV Ambitions Bode Well: Highlighting its ambitions as far as the lucrative and emerging autonomous vehicle (“AV”) market is concerned, Lyft recently inked a deal with Alphabet’s GOOGL Waymo. The deal aims to bring Waymo’s fully autonomous ride-hailing service to Nashville in 2026. This partnership will tap Lyft’s proprietary, integrated fleet-management capabilities via its Flexdrive subsidiary, which will handle end-to-end operations for the Nashville fleet, including vehicle maintenance, infrastructure and depot management.Riders will initially be able to request Waymo’s fully autonomous vehicles through the Waymo app, with plans to make the fleet available on Lyft’s network for matched rides later in 2026. Alphabet’s Waymo is a force to be reckoned with in the evolving and lucrative space. GOOGL, through its Waymo arm, already has commercial operations in several cities across the United States.With the goal to further its AV ambitions, LYFT also has deals with startup May Mobility, automated driving company Mobileye Global and Nexar. Lyft’s recent deals pertaining to AV highlight that it does not aim to be left behind, as rival Uber has signed many AV-related deals.LYFT’s Price Lock Feature Thrives: With the preference for the return-to-office mode by many companies, there is a surge in weekday demand for ride-hailing services. To compete more effectively with rivals in the ride-hailing arena, Lyft has introduced a Price Lock feature. This feature allows users to bypass surge pricing during peak commuting hours. Lyft riders can limit the cost of rides by paying just $2.99 per month. By locking in a commute price, they can also save money through the feature. If the price of the ride is lower than a rider’s locked-in price, the person pays the lower rate.Management stated that the Price Lock feature was performing better than expected. The company also noted that riders availing of Price Lock take four more rides per month on average than they did prior to buying the pass. Apart from commuters, this feature is helping drivers by creating more predictability on when and where to drive.Share Buyback Boost: In a shareholder-friendly move, management announced earlier this year an increase to its share repurchase program to $750 million from $500 million. Lyft intends to utilize $500 million of this authorization within the next 12 months. Strong cash flow generation allows LYFT to remain committed to returning value to its shareholders. LYFT’s cash flow generation has exceeded $1 billion for the trailing 12 months. Zacks Estimates Northbound: The Zacks Consensus Estimate for LYFT’s 2025 and 2026 sales implies a year-over-year increase of 12.3% and 14.6%, respectively. The consensus mark for LYFT’s 2025 EPS and 2026 highlights a 25.3% and 25.9% year-over-year uptick, respectively. Moreover, the EPS estimates for fourth-quarter 2025, first-quarter 2026, full year 2025 and 2026 have been trending northward over the past 60 days, reflecting analysts' bullishness on LYFT.Image Source: Zacks Investment ResearchCompelling Stock Valuation: From a valuation perspective, Lyft is trading cheaper than the industry. Going by its price/sales ratio, the company is trading at a forward sales multiple of 1.2, lower than Uber, DoorDash and the industry average. The company has a Value Score of B, comparing favorably to Uber’s C and DoorDash’s F.LYFT’s P/S F12M Vs. Industry, UBER & DASHImage Source: Zacks Investment ResearchLYFT a Smart Buy for InvestorsLyft continues to benefit from solid momentum in gross bookings and its strategy to secure a strong position in the growing autonomous vehicle market is promising. The company has formed several partnerships in this area, enabling it to pursue autonomous initiatives without incurring the substantial R&D expenses of developing own systems. Additionally, the recent easing of tariff tensions provides another boost for the stock. Its appealing valuation, along with upward revisions in earnings and sales estimates, further strengthens the investment case.With these multiple positives at play, Lyft stands out as an attractive investment opportunity at this time. This Zacks Rank #2 (Buy) undervalued stock is an ideal candidate for addition to one’s portfolio.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.See "2nd Wave" AI stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Alphabet Inc. (GOOGL): Free Stock Analysis Report Lyft, Inc. (LYFT): Free Stock Analysis Report Uber Technologies, Inc. (UBER): Free Stock Analysis Report DoorDash, Inc. (DASH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks