To The Moon

David Tepper’s wager on Lyft smells less like tech hype and more like a calculated turnaround play—but is it worth following him in?

The Numbers Don’t Lie—And They’re Getting Better

After years of spraying cash at growth, $Lyft, Inc.(LYFT)$ is finally turning the wheel toward discipline. In Q1 2025, adjusted EBITDA jumped to USD$61 million—nearly triple the USD$22 million a year earlier. The net loss shrank dramatically from USD$187 million to USD$31 million. That’s not just progress—it’s a pivot.

But what’s driving the margin lift? It’s not only cost-cutting. Lyft has overhauled its driver incentives model, relying more on algorithmic pricing than blanket promotions. Airport rides—typically more lucrative—are rising as a share of total volume, and better driver-passenger matching is reducing idle time. Operationally, the company has also slashed fixed costs, trimming real estate, consolidating tech spend, and squeezing down SG&A by nearly 18% year over year.

And here’s a seasonal twist investors might miss—Q1 is usually a low point in ride demand. If Lyft maintains or improves these margins into the summer, we may be looking at a structurally leaner machine than the market realises.

Resurrected from chaos—this time, with EBITDA in mind

A Hedge Fund Legend Sees a Bargain

Smart money quietly loaded up as Lyft bottomed—before anyone noticed

Accumulation built under USD$13—well before the price turned

David Tepper doesn’t chase growth. He pounces on mispriced value—and right now, Lyft looks like a textbook case. Even after rallying from USD$10 to over USD$23, the stock still trades at just 1.4x forward sales. Uber, in contrast, commands 3.7x.

This isn’t about market share ambition. Tepper’s bet is that Lyft no longer needs to win—just survive profitably in second place. If Lyft achieves its long-term goal of USD$1 billion in adjusted EBITDA by 2027, the current share price could still be undervaluing the company by a wide margin.

That said, it’s an ambitious target. To get there, Lyft must grow EBITDA at a compound rate near 50% per year. Achievable? Maybe—but it leaves no room for economic slowdown, cost slippage, or a return to driver subsidy wars.

Duopoly Doesn’t Mean Equal Power

Lyft operates in a two-horse race where one horse is wearing a jetpack. $Uber(UBER)$ controls 74% of U.S. ride-hailing, with greater brand reach, superior rider loyalty, and crucially, a diversified platform that includes food delivery and freight. Lyft? It’s a pure-play—and that cuts both ways.

On the downside, Lyft has weaker pricing power. Any fare hikes risk pushing riders into Uber’s ecosystem, especially when cross-promotions with Uber Eats sweeten the deal. On the upside, Lyft’s narrow focus makes it nimbler. With fewer distractions and less international complexity, the company can sharpen execution where it still has breathing room.

But let’s not ignore the structural threats. Driver supply remains vulnerable to wage expectations and inflation. Insurance costs—especially for self-insured claims—are creeping higher, and macro headwinds could quickly choke ride volumes if discretionary consumer spending slows.

The Optionality Nobody’s Pricing In

Yes, Lyft’s robotaxi partnerships with Waymo and Motional sound futuristic. But here's the economic reality—autonomous vehicles are not near-term profit drivers. Still, they matter. If scaled—even in a few test markets—AVs could significantly improve per-ride contribution margin by eliminating the costliest input: the driver.

For now, these partnerships are best viewed as long-dated call options. They won’t help Lyft hit its 2027 EBITDA target, but they might quietly support multiple expansion if investors start to believe the tech is commercially viable.

Less flashy—but perhaps more important—is Lyft’s insurance strategy overhaul. By shifting more liability exposure off its books through reinsurance, Lyft is improving both its cash flow visibility and balance sheet resilience. It’s not exciting, but it’s the kind of operational hygiene investors often miss—until they don’t.

So What’s Lyft Actually Worth?

Let’s get specific. If Lyft can achieve USD$1 billion in EBITDA by 2027, and you assign a conservative 16x multiple, you’re looking at a future enterprise value of around USD$16 billion. Net of modest debt and with roughly 400 million shares outstanding, that implies a fair share price around USD$35–40.

But here’s the fine print. Miss those targets, or see EBITDA stagnate near USD$300 million, and Lyft could just as easily fall back below USD$18. The current price around USD$23 sits awkwardly between optimism and uncertainty.

Lyft may not be a deep value buy anymore—but it’s not overpriced either. It’s in that rare category where sentiment and fundamentals are still in negotiation.

You don’t need to win the race to finish profitably

The Turnaround Is Real Enough to Matter

Lyft isn’t trying to be $Uber(UBER)$ anymore. And that, ironically, might be its best chance at long-term success. This is no longer a moonshot. It’s a margin recovery story—quiet, boring, but possibly very investable.

Tepper’s bet isn’t on disruption. It’s on execution. And so far, $Lyft, Inc.(LYFT)$ is delivering just enough to keep the story alive. The stock won’t triple overnight—but for patient investors willing to stomach some volatility, it might just get there eventually.

Sometimes the smartest move in markets isn’t to back the winner—but to buy the underdog at the right price.

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