Lyft Isn't Going Well

Lyft recently experienced a large drop in its market value with its share price collapsing by more than 30%. This was due to concerns over the company's recent decision to lower prices in an effort to stay ahead of Uber in the North American ride-sharing market.

  • However, this move may end up hurting Lyft's profits as analysts believe that any increase in ride volume will not be enough to offset the lower prices
  • Lyft and Uber have been competing for market share, with Uber having an advantage due to its global presence and more diverse business offerings
  • Analysts believe that Uber's global rideshare model and its presence in markets that have recovered more quickly than the US gives it an advantage
  • Additionally, as a larger platform, Uber is able to offer more volume for drivers, including in the food and grocery delivery market

The impact of the sell-off was significant, with Lyft shares closing 36.4% lower and 13 analysts lowering their price targets for the stock. This erased over $2 billion in the company's market value and wiped out almost all of its share price gains for the year.

Uber Surges Ahead

Uber reported that in a single quarter, it completed more than 2 billion trips globally, which is about one million trips per hour and up from 1.7 billion a year earlier. It also had an 11% increase in monthly active users, reaching 131 million. The mobility unit's total value of fares paid, or gross bookings, increased by 31% year on year. Uber's expansion into food delivery has helped the company stay afloat during the pandemic, and the company's CEO expects growth and profitability in the coming year.

  • Uber further announced that it generated $8.6 billion in revenue in the last quarter of 2022, a significant increase from the previous year when the Omicron variant of the coronavirus impacted travel
  • While many tech companies have laid off employees and cut costs, Uber has remained steady, and the CEO said there were no plans for company-wide layoffs

During the pandemic, internet-based services boomed, but Uber, which primarily offers rides to people, had to let go of around 7,000 employees in 2020. However, the company bounced back as the world reopened and people returned to their normal lives. The company expects to achieve operating income profitability at some point this year, which would demonstrate its growing strength.

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products. Please note that the writer of this article is not registered as a financial advisor.

Credits

Photo by Viktor Avdeev on Unsplash.