Lyft Inc shares tumbled about 19% on Friday as the ride-hailing company's strategy to claw back market share from rival Uber with lower fares stoked concerns of a hit to its profit margins.
At least 16 analysts slashed their price targets on a stock that has widely underperformed the market this year.
Lyft gave a disappointing adjusted core earnings forecast for the second quarter on Thursday as efforts to add more riders with price cuts take a toll on profitability, underscoring the hurdles new CEO David Risher faces in turning around the company. Uber CEO Dara Khosrowshahi this week indicated the company would not start a price war with Lyft, saying "the days of paying for share and essentially using shareholder money to buy share temporarily .. are over".
The company plans to offset the lower prices with annual cost savings of about $330 million from decisions such as laying off more than 1,000 employees, or 26% of its staff, in April."It is still very unclear as to whether any recovery can be maintained given significant advantages of Uber," Atlantic Equities analysts said.
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