Lyft went public in 2019 at $72 a share, but the stock closed lower than $10 for the first time this year
Lyft Stock Lost Three-Quarters of its Valuation This Year. Image: shutterstock.com
Shares of Lyft Inc. fell 3.3% to $9.87 on Tuesday as they continue a steady decline. The ride-hailing company has lost roughly $11.18 billion of its market cap, while Lyft stock has declined nearly 77% this year.
Massive changes to the Lyft stock price took place in October. Then the U.S. Department of Labor proposed legislation to “combat employee misclassification,” which would directly affect ride-hailing apps that depend extensively upon gig workers.
Upon the announcement, Uber’s share price dropped by more than 10% to $24.61, Lyft’s tanked more than 12% to $11.22, while DoorDash’s fell over 5% to $44.98.
Cost cuts and forecasts
To amend financial losses, Lyft conducted two rounds of workforce reduction. First, the company cut 60 jobs (2% of the workers), to later proceed to 13% of its staff (700 employees), joining the major wave of tech layoffs in 2022.
Besides, the company has been slashing costs in all possible ways, with executives emphasizing on each quarterly earnings call that they are continuing to target profitability. Despite all the challenges, the company management reiterated the forecast of $1 billion in earnings before interest, taxes, depreciation and amortization (Ebitda) in 2024, as well as $700 million in free cash flow.
At the same time, analysts like Cowen & Co. seem not to share optimistic predictions. They recently downgraded Lyft’s stock to “market perform” from “outperform”. In addition, the analyst John Blackledge also expressed his concern over rising auto-insurance costs, adding up to inflationary and recessionary pressures. He also cut his price target for the stock to $14 from $36.
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