Uber and Lyft Amid Downgraded, Robotaxi Uncertainty Flagged As Concern

The future of ride-hailing is in flux, and Wall Street is taking notice.

Canaccord Genuity downgraded both Uber (UBER) and Lyft (LYFT) from “Buy” to “Hold,” signaling a growing unease about the impact of autonomous vehicles (AVs) on the traditional ride-sharing model. The firm lowered its price target for Uber to $84 from $90 and Lyft to $14 from $22, citing the potential for “rapid disruption” as the autonomous vehicle market crystallizes.

The move reflects a broader sentiment shift among analysts who are increasingly cautious about the long-term viability of company's such as Uber and Lyft in a world dominated by robotaxis.

Lyft, currently trading at $15.72, has experienced a significant surge in the past week, adding 8.8%. However, its five-year performance paints a less rosy picture, with the stock down over 50%.

Uber, while outperforming Lyft in recent years, is not immune to these concerns. In closing at $77.07, Uber's stock price has added 52% over the past 5 years, and 25.7% since the start of this year.

The core of the issue lies in the burgeoning robotaxi market. Tesla's (TSLA) impending robotaxi service, with projected costs as low as $0.97 per mile compared to the current $3.40 per mile for human-driven rides, poses a significant threat to Uber and Lyft’s pricing power.

While Uber has forged partnerships with AV companies like Aurora and Waymo, analysts worry that these collaborations may not be enough to secure its long-term dominance. The risk remains that a few autonomous vehicle “behemoths” could control the value chain, relegating Uber and Lyft to the “golden days of the past,” as Canaccord analysts put it.

Adding to the uncertainty is General Motors' (GM) late 2024 decision to cease funding its Cruise division's robotaxi development. This move signals a potential consolidation of the AV market, potentially limiting the availability of AV partnerships for ride-hailing companies.

Lyft's attempts to stay in the game, including partnerships with May Mobility and Mobileye to integrate autonomous vehicles into its platform, starting in Atlanta in 2025, are viewed with cautious optimism. The scalability and near-term impact of these initiatives remain uncertain, especially compared to the advancements made by competitors like Waymo and Tesla.