Weighing Lyft’s 50% Rally in 2025 Amid New Partnerships and Shifting Competition

If you have ever caught yourself wondering, "Should I buy, hold, or walk away from Lyft stock right now?", you are far from alone. Lyft’s share price has been on a wild ride, up 4.8% over the last week after a tough 30-day stretch, and soaring 50% since the start of the year. These swings are no accident. Investors are responding to ongoing buzz about new partnerships, shifting competition in the ride-share world, and the company’s bold steps to find profitability in a tough market. Yet, for every positive headline, there is lingering skepticism about sustained growth and the shadow of losses from years past.

Over the past year, Lyft shares have gained over 52%, showing renewed optimism among investors that the business is finding its footing. However, over a three-year horizon the stock's return is 41%, and if you zoom out over five years, shares are still down 10.3%. Clearly, the market is wrestling with how to value Lyft’s progress and the effects of recent strategic moves relative to its complex past.

So where does that leave us on the valuation spectrum? Based on six standard checks for undervalued companies, Lyft scores a 2, undervalued on just two counts. As we break down each valuation approach in the next section, keep in mind: while numbers and ratios tell part of the story, there is a smarter, more nuanced way to judge what Lyft is really worth, and we will get to that by the end of the article.

Lyft scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Lyft Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a popular way to estimate what a company is really worth based on its expected future cash flows. In summary, it projects the cash Lyft could generate in years to come and then discounts those future dollars back to their present value, giving a clearer sense of intrinsic value today.

According to the latest numbers, Lyft’s current free cash flow is $923.5 million. Analysts have issued estimates for the next five years, forecasting solid year-over-year growth before projections move into more speculative territory as extrapolated by Simply Wall St. By 2029, future free cash flow is expected to reach $718 million, with a projected $691 million for 2035. All projections remain in the hundreds of millions of dollars per year, rather than moving into the billion-dollar range, which reflects steady but not explosive growth assumptions.

With these inputs, the DCF analysis delivers an intrinsic value of $28.32 per share. This suggests Lyft is trading at a 27.7% discount to its estimated fair value, indicating the stock could be undervalued at current prices.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Lyft.

Our Discounted Cash Flow (DCF) analysis suggests Lyft is undervalued by 27.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Lyft Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is a tried and true method for valuing profitable companies, as it directly links the company’s share price to its actual earnings. For businesses like Lyft that have pushed toward profitability, the PE ratio can help investors gauge how much they are paying for every dollar of current earnings, providing an intuitive sense of value.

However, the "right" PE ratio varies. Companies with stronger growth prospects or lower risks often warrant a higher PE, while riskier or slower-growing companies generally trade at lower multiples. Beyond raw profit, expectations for future growth and the level of business risk play a big part in determining what is fair.

Right now, Lyft trades at a PE ratio of 90.3x, which is much higher than the Transportation industry average of 26.3x or its peer average of 26.7x. At first glance, this high multiple might seem alarming, but context matters. Simply Wall St's proprietary Fair Ratio, a comprehensive benchmark that adjusts for Lyft’s growth outlook, profitability, overall risk, and company size, pegs a fair PE for Lyft at 21x. This analysis offers a tailored yardstick and moves beyond simple peer or industry comparisons by factoring in elements unique to Lyft. As a result, investors get a more nuanced sense of whether they are overpaying for expected growth or getting a deal.

Comparing the Fair Ratio of 21x to Lyft’s actual PE of 90.3x suggests that, even when accounting for growth and risk, the share price is significantly above what fundamentals justify.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Lyft Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives, a dynamic approach that links the story behind a company like Lyft to clear financial forecasts and an individualized fair value estimate.

A Narrative is essentially your own perspective on a company, grounded in your beliefs about its future and what drives its success, paired with your assumptions for key financial metrics like future revenue growth, margins, and fair value.

Rather than just relying on static ratios or consensus targets, Narratives help you connect Lyft’s evolving journey, such as its bet on autonomous vehicles, new global partnerships, or platform innovations, to a concrete set of numbers and a price you believe is fair.

What makes Narratives especially powerful is that they are easy to build and update in real time on Simply Wall St’s Community page, where millions of investors are already exchanging ideas and updating their Narratives based on the latest news or earnings announcements.

This tool does not just simplify how you track your thinking compared to current market prices; it also equips you to act decisively, since you can quickly see if your Fair Value is above or below today’s price and why your view may differ from others.

For example, one investor may believe Lyft’s global AV expansion and partnerships will boost its value to $28 per share, while another, more cautious user may set their fair value nearer to $10, depending on how optimistic they are about risks and future profits.

Do you think there's more to the story for Lyft? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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