Lyft is starting to make some right moves with urging from activist Engine Capital. What's next

Core Viewpoint - Lyft is undergoing significant operational and financial improvements under new CEO David Risher, yet its share price has declined due to market dynamics and capital allocation issues [3][4]. Company Overview - Lyft operates a multimodal transportation network in the US and Canada, offering ridesharing, bike and scooter rentals, and vehicle rentals through its platform [1]. Recent Developments - Engine announced a position in Lyft, calling for a strategic review, improved capital allocations, and the elimination of the dual-class share structure [2][5]. - Following productive engagement, Lyft committed to significant share repurchases, increasing its buyback authorization to $750 million [8]. Financial Performance - From 2023 to 2024, Lyft's revenue increased by 31.39%, EBITDA improved from a negative $359.1 million to $27.3 million, and free cash flow rose from negative $248.06 million to $766.27 million [3]. Market Position - Lyft holds approximately 24% of the US rideshare market, while Uber dominates with about 75%, creating a challenging competitive environment for Lyft [4]. Capital Allocation Issues - Lyft has experienced excessive share dilution, with shares outstanding nearly doubling since 2019, primarily due to stock-based compensation practices costing around $330 million annually [4][6]. - The recent $500 million buyback program is insufficient to counteract dilution from stock-based compensation [6]. Governance and Strategic Recommendations - Engine is advocating for the elimination of Lyft's dual-class share structure, which currently allows founders to maintain significant control despite their reduced involvement [7]. - A strategic acquisition or merger with a larger entity could provide Lyft with the necessary scale and diversification to compete effectively against Uber [5].