Activist hedge fund Engine Capital Management has nominated two director candidates for Lyft’s board, signalling a potential proxy battle at the ride-hailing firm, sources familiar with the matter have told Reuters.

The hedge fund has been pressuring Lyft to address its underperforming stock, overhaul its corporate governance, and rethink its strategic direction. A key point of contention for investors has been Lyft’s dual-class share structure, which concentrates voting power among insiders.

Engine’s boardroom challenge boosted Lyft’s stock by 2.2% to $12.49 following the news. However, the stock remains down 36% over the past year and 55% over the last five years, significantly underperforming rival Uber (UBER.N), which boasts a $159bn market cap—more than 30 times Lyft’s $5.2bn valuation.

The hedge fund’s stake in Lyft was below 1% at the end of 2024, per regulatory filings. However, Lyft’s bylaws require a minimum 1% ownership to nominate directors, raising questions about whether Engine has increased its holdings.

Unlike Uber, which has expanded globally and diversified into food delivery and freight, Lyft remains focused on the North American market. This narrower strategy has led to investor concerns over growth limitations and long-term viability.

With only four board seats up for election this year, Engine’s challenge could shake up Lyft’s leadership if successful. The hedge fund’s push underscores growing investor frustration with the company’s trajectory.

A representative for Lyft was not immediately available for comment, while Engine Capital declined to comment on its nomination efforts.