Investing.com — Lyft Inc. (NASDAQ:LYFT) shares fell sharply by 7.5% following the announcement from Delta Air Lines (NYSE:DAL) that it plans to end its partnership with the rideshare company in favor of a new agreement with Uber (NYSE:UBER).
The market responded to the news that Delta’s SkyMiles loyalty program will soon allow customers to earn miles through Uber rides and deliveries, as stated in a Delta press release.
The move by Delta is seen as a competitive blow to Lyft, which is now losing a significant partnership that could have implications for its growth strategy and its ability to meet earning estimates.
Morgan Stanley (NYSE:MS) analyst Brian Nowak highlighted the competitive risks that Lyft faces, noting that Uber’s aggressive stance in securing partnerships could signal a larger strategy to invest against Lyft, particularly in the context of investor concerns about potential disruptions from autonomous driving technologies.
Nowak maintains an overweight rating and a $95 price target (PT) on Uber, while keeping an equal-weight rating and an $18 PT on Lyft.
In his assessment of the industry landscape, Nowak remarked, “With investors increasingly concerned that Uber will be disrupted by autonomous driving we think it’s important to remember that Lyft still makes up ~30% of the US Rideshare industry…which Uber could invest more aggressively against to capture over the next few years.”
The loss of the Delta partnership is a significant event for Lyft, as partnerships with major corporations like Delta can provide a stable source of customers and contribute to the overall perception of a company’s market position.
This development is particularly impactful because it not only affects Lyft’s current operation but also poses questions about its future growth trajectory and market share retention.
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