Lyft (LYFT) has drawn fresh attention after launching a collaboration with United Airlines that lets MileagePlus members pay for rides using miles, linking airport trips directly to an established travel rewards program.

These loyalty headlines come as Lyft’s share price has recently picked up, with a 1-day share price return of 3.64% and a 90-day share price return of 15.22%. Yet year to date the share price has fallen 22.33%, while the 3-year total shareholder return of 52.03% contrasts with a 5-year total shareholder return that is down 74.41%. This points to improving shorter term momentum against a much weaker longer term record.

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With Lyft reporting recent revenue growth alongside weaker net income trends and the stock trading below the average analyst price target, the key question is whether investors are seeing a genuine undervaluation or whether the market is already pricing in future growth.

Most Popular Narrative: 18% Undervalued

The most followed narrative on Lyft values the stock at a fair value of $18.64 against the last close of $15.37, framing a material gap that comes down to how future earnings and margins are expected to evolve under current assumptions.

The ongoing rollout and consumer adoption of autonomous vehicles backed by new partnerships with tech leaders like Baidu and operational capabilities in both the U.S. and Europe are expected to significantly expand Lyft's total addressable market (TAM), lower labor costs, and increase long-term gross margins and earnings. Strategic global and cross-industry partnerships (e.g., with United Airlines, Chase, DoorDash) are driving higher-frequency usage and access to premium customers, increasing average revenue per user and providing resilient, recurring transaction growth.

Curious what sits behind that valuation gap for Lyft? The narrative leans on a specific mix of revenue growth, shifting profit margins and a future earnings multiple that assumes different economics than today. The exact blend of those inputs is where the story really gets interesting.

Result: Fair Value of $18.64 (UNDERVALUED)

However, this Lyft narrative can be thrown off if competitive pressure from Uber limits market share gains, or if costly autonomous vehicle investments and regulations weigh on profitability.

Next Steps

With both risks and rewards in play around Lyft, this is a moment to move quickly, review the underlying data and form your own stance. To weigh the balance for yourself, start by checking the 3 key rewards and 2 important warning signs.

Looking for more investment ideas beyond Lyft?

If you want to build on what you have learned from Lyft, this is the moment to scan for other opportunities that could fit your portfolio.

• Target potential mispricing across the market by reviewing companies screened as 44 high quality undervalued stocks.
• Strengthen your income stream by focusing on businesses highlighted in the 7 dividend fortresses.
• Prioritise resilience by checking companies featured in the 74 resilient stocks with low risk scores.

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.