Lyft (LYFT, Financial) is experiencing a surge to multi-month highs, driven by several positive developments despite missing Q1 2025 EPS and revenue expectations. The stock rally is fueled by Engine Capital's withdrawal of its board nominations, ending a contentious proxy battle, an expanded $750 million share buyback program, and a promising Q2 forecast for gross bookings and adjusted EBITDA. Lyft's Q1 results were against low expectations following Uber's (UBER, Financial) disappointing Q1 earnings report.

• In Q1, Lyft achieved gross bookings of $4.16 billion, up 13.5% year-over-year, slightly exceeding expectations. Rides hit a record 218.4 million, up 16% year-over-year, driven by strong demand across various trip types. Enhanced driver retention through Lyft's 70% fare guarantee and rider-focused features like faster ETAs, which reduced wait times by 10% year-over-year, supported these metrics.
• Lyft's competitive pricing strategy, including a reduction in base fares to match UberX pricing, increased ride volume and active riders, indicating market share gains in key U.S. cities. However, this pricing pressure slightly decreased revenue per ride ($6.64 vs. $6.80 in Q1 2024), contributing to the small revenue miss.
• Profitability improved significantly for Lyft, with adjusted EBITDA rising by 59% year-over-year to $106.5 million. The company guided Q2 adjusted EBITDA of $115-$130 million, matching analysts' expectations, and implying year-over-year growth of 26% at the high end. Key profitability drivers include reduced insurance costs, higher driver hours, a healthy driver base, and cost discipline, with total costs and expenses increasing by a manageable 10%.
• Long-term, Lyft's robotaxi progress is a cornerstone of its growth strategy, though the company did not emphasize its robotaxi partnerships during the earnings call. Instead, Lyft focused on its Q1 performance and highlighted its acquisition of FREENOW, a European multi-mobility app, marking its most significant expansion outside North America. The addition of FREENOW, with its core taxi service, will nearly double Lyft's total addressable market to over 300 billion personal vehicle trips per year.

Lyft’s strong Q2 guidance, expanded $750 million share repurchase program, and resolution of the Engine Capital proxy battle are boosting its stock, reflecting renewed investor confidence. These positive factors, along with healthy gross bookings and profitability gains, position Lyft to navigate competitive pressures and capitalize on long-term opportunities like robotaxis.