Lyft Stock Spikes 14%. Self-Driving Cars Are Coming to Nashville.

Lyft stock climbed sharply on news of it was expanding its fully autonomous ride-hailing service with Waymo to Nashville in 2026. (Jeenah Moon/Bloomberg)

Lyft and Alphabet’s Waymo said they were expanding their fully autonomous ride-hailing partnership to Nashville next year.

Shares of Lyft were up 14% to $23 following the news, putting the stock on track for its highest close since May 3, 2022, according to Dow Jones Market Data. Alphabet fell 1.3%.

Riders initially will hail Waymo’s self-driving vehicles on the Waymo app, the companies said. Waymo then plans to dispatch its fleet on the Lyft network later in the year. Lyft subsidiary Flexdrive will provide end-to-end management of Waymo’s fleet, including maintenance and depot operations.

Waymo’s autonomous taxis already operate in Phoenix, the San Francisco Bay Area, Los Angeles, Atlanta, and Austin, Texas. The company has plans to expand to Miami, Washington, D.C., and Dallas.

Wall Street has at times considered Waymo a threat to ride-hailing giants Lyft and Uber Technologies , which don’t operate autonomous cars and must work with outside partners.

Lyft and Waymo have collaborated on self-driving technology as far back as 2017, but the companies’ relationship seemed to cool in recent years. At the same time, Uber notched its own partnerships with Waymo in Atlanta and Austin, raising questions about whether Lyft may get squeezed out of the autonomous taxi market.

Those fears led to heavy short-selling of Lyft, said Brandon Carnovale of Half Moon Capital, a hedge fund that owns 75,000 shares of the stock. “This is a thesis changing development for Lyft,” he told Barron’s.

Each new partnership deal or any sign that Waymo may commit to running its own ride-hailing service can shift investor sentiment around Uber and Lyft, Carnovale added.

The Nashville deal between Lyft and Waymo led to a selloff of Uber shares. The stock was down 4.9%.

Write to Nate Wolf at nate.wolf@barrons.com