Ridesharing company Lyft (NASDAQ:LYFT) has been enjoying solid user growth over the past few years, although that growth is quickly decelerating. The company had 22.3 million Active Riders on its platform at the end of Q3, but that was only up approximately 500,000 quarter over quarter -- the slowest sequential growth in three years.

One Wall Street analyst worries that Lyft's user base could peak soon.

Lyft ride volumes are about to "slow materially"

KeyBanc analyst Andy Hargreaves put out a research note to investors this week, reiterating a sector weight (equivalent to a hold) rating on Lyft shares while cautioning that ride volumes may "slow materially" going forward. Lyft may need to expand the use cases of its platform in order to mitigate this risk, according to Hargreaves, but that's much easier said than done. (KeyBanc was also an underwriter in Lyft's IPO in March.)

When including estimates for Uber (NYSE:UBER) to assess the broader U.S. ride-hailing industry, Hargreaves believes the industry saw a 2% decline in total riders in the third quarter, marking the first year-over-year drop. The analyst attributes that softness to "limited geographical expansion and less aggressive promotions." Ridesharing has become fairly mature and saturated in major U.S. markets, while Uber and Lyft continue to hope that ride-hailing's ongoing rationalization will pave the path to profitability. Still, reduced demand is a fundamental and expected consequence of prices slowly climbing higher.

As new customer acquisitions slow, Lyft will need to focus on improving customer retention and squeezing growth out of price increases, according to Hargreaves. With ride-hailing being heavily commoditized, justifying price increases is challenging, particularly when Uber doesn't match Lyft's pricing strategy.

In its prospectus, Lyft pointed to annual cohorts of riders, saying that cohorts tend to increase usage of the platform over time. Cohorts include all Active Riders that take their first Lyft rides in a given year.

Cohort 2015 2016 2017 2018 2015 25.1 million rides 48.3 million rides 59.7 million rides 66.9 million rides 2016 70.9 million rides 116.1 million rides 119.3 million rides 2017 140.1 million rides 201.6 million rides 2018 169.6 million rides

"Over time, we have seen the aggregate number of Rides taken generally increase as riders in each cohort derive more utility out of our platform and expand their use cases," the company wrote in its IPO filing. "We expect the growth in Rides taken by each cohort in each year to continue as a result of an increased frequency of use of our multimodal platform as we innovate and expand offerings, though the growth may fluctuate from year-to-year."

Lyft's cohort data only includes the total number of rides taken and does not directly factor in pricing information or include how many Active Riders are in each cohort. Undercutting this argument, KeyBanc does not believe that cohorts of riders increase spending levels meaningfully over time.