Lyft (LYFT -2.64%) is a platform that connects third-party drivers with people needing a ride. When it comes to stocks that should be bought, I believe it's one of the market's best-kept secrets.
In choosing to celebrate bigger players such as Uber Technologies and upcoming autonomous taxi services from companies such as Tesla, investors don't believe that Lyft stock is a good opportunity. But I believe there are three reasons to buy Lyft stock like there's no tomorrow.
Image source: Getty Images.
1. Lyft's opportunity is huge
Whereas Uber has multiple businesses such as ride-sharing and food delivery, Lyft focuses on just U.S. ride-sharing. According to Statista, that's about a $60 billion market and growing. Lyft has some interesting products to help it grab its piece of the pie.
For starters, Lyft partners with DoorDash. Users who link their Lyft accounts with their accounts for DoorDash's membership program DashPass enjoy extra benefits, and so far it's been a huge success. The partnership only launched in late 2024. But according to management, roughly 10% of DashPass members have already linked accounts, and they took 16 million rides on Lyft in the first quarter of 2025.
Lyft is also looking to provide better service for particular demographics to ensure customer loyalty. For example, the company has Women+ Connect, which allows female riders to have female drivers if they so desire. It also has Lyft Silver for senior citizens, which provides vehicles that are easy to get in and out of and also provides live phone support, among other things.
Tailored products such as Women+ Connect and Lyft Silver could help Lyft become the preferred platform for these particular demographics, helping it retain and even gain U.S. market share. Lyft is even thinking about international market share with its recent acquisition of European taxi service Freenow.
Of course, all these products speak to Lyft's current business model that includes a human driver. But the company is also prepared if autonomous taxis really are the future of mobility. Lyft has a partnership with Mobileye, a company that provides self-driving technology to multiple automakers. The idea is that if and when self-driving taxis take off, they'll be seamlessly added to the Lyft platform.
Lyft is also partnering with May Mobility to launch driverless services in Atlanta this summer. And next year, the company is looking to Marubeni for an autonomous taxi launch in Dallas.
For investors still not convinced that Lyft is thinking about a possible autonomous driving future, allow me to mention Flexdrive. Autonomous taxis might not have drivers, but those vehicles will still require maintenance and management. With its subsidiary Flexdrive, Lyft is building driverless fleet-management infrastructure that few players are thinking about today. This could provide a strong revenue stream in an autonomous driving future.
2. Lyft's growth is impressive
To reiterate, the prevailing narrative regarding Lyft is that it's being outcompeted by Uber and being made irrelevant by Tesla's robotaxi service. But let's see what the actual numbers have to say.
In Q1 2025, Lyft set new quarterly records for both drivers and rides taken. The company's bookings were up 13% year over year, marking its 16th straight quarter of double-digit growth. Looking at management's guidance for the upcoming second quarter, all these record-setting trends are expected to continue.
On top of setting records for platform adoption, Lyft is also doing well with profitability. The company used to burn cash. But after it hired CEO David Risher in 2023, it quickly started to turn things around and now generates positive free cash flow. As of Q1, it's generated $920 million in free cash flow over the past year, which is outstanding for a company this size.
3. Lyft stock is dirt cheap
I won't belabor this point, but Lyft stock is dirt cheap. It trades at just 1 times its trailing sales, and it looks even cheaper when you consider that it trades at a price-to-free cash flow multiple of just 7.
LYFT Price to Free Cash Flow data by YCharts. PS = price-to-sales.
If it's true that Lyft's future is bleak, then it makes sense for it to trade at a depressed valuation. But given that the business is growing, setting records, and building a suite of products with an eye toward multiple potential futures, the valuation for Lyft stock is simply too cheap to ignore.
Over the next year, Lyft intends to take advantage of its cheap stock price to buy back $500 million of its stock. That's good for about 8% of its shares at the current price, and quite a shareholder-friendly move.
Lyft is a profitable growth company, and it's also a value stock. That's a rare combination for investors, which is why I believe Lyft stock is a buy today.
