The shares of Lyft (NASDAQ): Premarket trading on Wednesday was down by more than 25% after the company announced a lower-than expected Q1 number active riders.

Lyft’s Q1 revenues were $875.6 Million, an increase of 44% YoY. This is higher than the consensus estimate of $844.5 millions. Analyst expectations were $14.4 million higher when adjusted EBITDA reached $54.8 million. This was an improvement over the $1.31 per share loss reported last year.

Quarterly, 17.8 Million active riders were registered. That’s 32% higher YoY and close to the consensus of 18,000,000. The revenue per active rider was $49.18 which is a 9% increase YoY.

Lyft is expecting revenue to range from $950million to $1 billion for the second quarter. However, it will miss the estimate of $1.02 trillion. EBITDA adjusted for Q2 is estimated to be between $10 million and $20 million.

According to the company, it will invest in drivers supply during this quarter.

“Our Q1 results meaningfully exceeded our outlook. This outperformance was driven by increased demand and resilient driver levels,” said CFO Elaine Paul.

Shyam Patil (Susquehanna Analyst) reduced LYFT stock’s value to Negative from Positive, and lowered price target to $25.00 instead of $54.00.

“We believe the softer near-term outlook, need to increase investments, and numerous macro headwinds are likely to weigh on shares in the near-term, causing us to move to the sidelines,” Patil said in a client note.

Credit Suisse Analyst Stephen Ju reduced the price target by $60.00 to $61.00 per share, however it remains Outperform-rated.

“Despite better-than-expected 1Q22 results, the focus will be on Lyft’s decision to invest ahead of the anticipated demand recovery. We believe the company’s move to be proactive, as it looks to improve the user experience levels, while keeping pace with the expected rise in demand… We maintain our Outperform rating on the following:1) large, fragmented, and underpenetrated addressable market of $745b, 2) autonomous and subsequent decrease to pricing offers optionality for earlier entry into steeper part of consumer adoption S-curve, 3) upside potential longer-term to generate ongoing operating leverage as the US ride share sector remains a rational duopoly,” Ju said in memo to clients.

Lyft stock was down more than 30% YoTD going into the earnings reports.

By Senad Karaahmetovic