Is ridesharing recession-proof?

Americans may be cutting back their spending on fancy restaurants and Venice vacations, but one convenience they apparently can’t resist is a Lyft.

Lyft’s shares were lifted 28.08% on news of a record-busting quarter: Ride volume jumped 16% year over year to 218.4 million, surpassing forecasts of 215.1 million. Meanwhile, gross bookings also topped expectations, rising 13% annually to $4.16 billion, notching the company’s 16th consecutive quarter of double-digit growth.

Although the ridesharing app’s first-quarter revenue of $1.45 billion fell just shy of the expected $1.46 billion, the company defied grim forecasts on the earnings front, posting EPS of $0.01, higher than the anticipated loss of $0.02 and far better than its $0.08 loss during the same quarter last year.

As for widespread fears that passengers might curb their rideshare spending amid an iffy economy, CEO David Risher doesn’t seem worried in the slightest. “The consumer demand is absolutely there,” he explained.

Lyft’s wild ride

Lyft has faced an uphill battle of late, including a skirmish with activist investor Engine Capital, which had been pushing for changes amid concerns over its stock price and strategic positioning. But this stakeholder withdrew its campaign on Friday after Lyft boosted its share buyback plan from $500 million to $750 million.

“A $750 million buyback is like 10% of the total market cap, which highlights an opportunity for investors,” noted Eric Clark, portfolio manager of the Rational Dynamic Brands Fund.

The news was enough to convince Goldman Sachs analyst Eric Sheridan to upgrade the stock rating from “neutral” to “buy” with a $20 price target.

To top it off, Lyft seems to be gaining ground on alpha dog Uber. Although the industry giant has cornered around 75% of the rideshare market versus Lyft’s 25%, Uber stock dropped in the wake of a mixed Q1 report earlier this week, with its $11.53 billion in revenue falling short of $11.62 estimates.

Still, Uber does have a head start in terms of robotaxis, having inked deals with Google’s Waymo, which is already picking up 250,000 US passengers per week. Lyft has signed on with Mobileye to launch its own fleet as soon as 2026, but it's clearly got some catching up to do.—JD