LYFT on Thursday forecast current-quarter revenue below estimates as it aims to lower surge pricing to keep up with bigger rival Uber, whose global presence has helped it better leverage a post-pandemic jump in ride-hailing.

Lyft shares slumped more than 30 per cent in extended trading, wiping out nearly US$2 billion of the company’s market capitalisation. They were also the most traded on the Nasdaq.

The company’s bigger presence on the US West Coast, a region that analysts have said was trailing the rest of the United States in its return to pre-Covid demand and where rideshare drivers are in short supply, could be hurting its recovery compared with Uber.

Lyft said it plans to take advantage of a recovering market by lowering prices during surge hours as it signs up more drivers, thanks to incentives paid out earlier.

“Given the healthy marketplace, which hasn’t been the case coming off of the pandemic, it’s important for us to take advantage of that opportunity,” Lyft President John Zimmer said in an interview with Reuters. “Which means lower prices and less prime time.”

Zimmer said the West Coast had “not fully” recovered but noted a “material improvement.”

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Lyft forecast first-quarter revenue of about US$975 million, which fell below analyst estimates of US$1.09 billion, according to Refinitiv data.

“They are clearly struggling here ... They need to evaluate their operations here,” said Tejas Dessai, an analyst at Global X ETFs.

Lyft forecast first-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), a key measure of profitability that strips out some costs, of between US$5 million and US$15 million.

Chief financial officer Elaine Paul said the drop in base prices and prime time flows directly to the bottom line, with a partial hit from lower demand.

For the fourth quarter, Lyft reported an adjusted EBITDA of US$126.7 million, excluding the US$375 million it had set aside for increasing insurance reserves. Analysts had forecast US$91.01 million.

“We wanted to ensure we strengthened our insurance reserve ... the purpose of doing that is to ensure we don’t have that type of volatility going forward,” Zimmer said in an interview. Active riders rose 8.7 per cent to 20.36 million for the fourth quarter, Lyft said, above the FactSet estimate of 20.30 million. REUTERS