Ride-sharing company Lyft (NASDAQ: LYFT) stock tumbled 14.1% through 11:15 a.m. ET Wednesday after missing on sales in its Q4 earnings report last night.
Analysts expected Lyft to report Q4 2025 sales of $1.75 billion, but sales came in below $1.6 billion. On earnings, analysts anticipated $0.12 per share, but Lyft reported… $6.81 instead!
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Ahem. On the face of it, you’d think investors would find this news incredibly good. In fact, it’s just “incredible” — or at least not comparable to the estimate. Lyft’s $6.81 in diluted earnings per share “includes a benefit from the release of the valuation allowance,” so it’s not really something Lyft can duplicate in future quarters.
That’s why investors aren’t paying it much attention and are focusing on other numbers instead.
Problem is, those other numbers aren’t encouraging. While “gross bookings” climbed 19% year over year, revenue was up only 3%, weighed down by “certain legal, tax, and regulatory reserve changes and settlements.”
For the full year, Lyft’s gross bookings climbed 15% to $18.5 billion, revenue rose 9% to $6.3 billion, and net income was $2.8 billion — basically the same as for Q4 alone, and basically for the same reason (i.e., the tax benefit).
In other words, Q4 was a messy quarter, and investors don’t seem to know what to make of it. Let’s see if I can help with that:
Whatever its “earnings,” Lyft generated $1.1 billion in free cash flow in 2025 — 47% year-over-year growth. Free cash flow is growing faster than sales and bookings, and Lyft says bookings are still growing in the high teens.
At a 6x price-to-free cash flow ratio, with growth well into the double digits, Lyft stock is a buy.
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