As of 12:44 p.m. ET, the stock was down 2.9%.
Bank of America (BAC 1.06%) analyst Michael McGovern initiated coverage on Lyft with an underperform rating, and said that the company appears to have lost market share to its chief rival in recent years. Uber, the leading ride-hailing company, said its U.S. mobility share was at or near a multiyear high in the second quarter. The analyst also sees Lyft as being at a disadvantage against Uber due to its smaller scale, and expected it to continue losing market share. McGovern gave it a 12-month price target of $14, in the neighborhood of where it traded after Tuesday morning's pullback.
Lyft shares actually took a jump after the company delivered its second-quarter earnings report a month ago. Its revenue rose 30% to $990.7 million, in line with estimates, and adjusted EBITDA more than tripled to $79.1 million, showing the company is making progress toward its goal of becoming more profitable.
However, it remains unprofitable on both a GAAP and cash flow basis due to high stock-based compensation, as well as a $275 million increase in liabilities for insurance, which was required by regulatory agencies.
Lyft's second-quarter growth trailed Uber's as that company posted 55% growth in gross bookings, though apples-to-apples comparisons are difficult because Uber operates globally while Lyft is only active in North America.
The good news for Lyft investors is that both it and Uber seem to have curtailed the driver and rider incentives that led to wide losses earlier in their histories, but the recent results show Lyft still has work to do to reach financial stability, especially on a cash flow basis. Investors should keep an eye on the market share battle with Uber as well, even though Lyft seems to be making progress on getting back to pre-pandemic ridership levels.