Lyft shares fell 32% before the bell on Friday after a bleak forecast fueled worries that the company will have to cut prices and sacrifice profit to avoid being a distant second to rival Uber in the North American ride-sharing market.

Both the companies have been locked in a battle for market share coming off the pandemic lows, with the latest earnings showing Uber's larger scale and pricing power was allowing it to capitalize on the resurgence at its rival's expense.

"Rideshare is now approaching full recovery in the United States, but Lyft is not," said J.P. Morgan analysts, who were among the 13 who slashed their price targets on the stock.

Lyft shares were set for their worst day on record, if premarket losses hold. The company was set to lose $2 billion in market value and nearly all of its stock price gains this year.

Lyft provided a first-quarter profit and revenue forecast on Thursday that was below market expectations, a stark contrast to Uber's strong profit forecast and better-than-expected earnings.

"This outlook continues the recent trend of Lyft growing slower than the broader rideshare market ... placing a greater spotlight on Lyft's scale and platform breadth relative to Uber," Canaccord Genuity analysts said.

Driver supply at Lyft rebounded in the fourth quarter to levels seen in 2019 before the pandemic, while driver supply at Uber was at a record high.

The improving driver supply will, however, mean that Lyft will see lesser surge pricing in the first quarter, company executives said.

The company also had to lower prices in January after Uber dropped its fuel surcharge earlier that month, while analysts said Lyft's larger presence on the West Coast also weighed as many technology companies there have not returned to office.

"Lyft is making the difficult trade off to lower price in order to help conversion and prevent further share loss to Uber," Needham analysts said.

"Despite the constructive commentary on demand, we do not assume volume will be able to offset lower prices."