Ridesharing companies like Uber (NYSE:UBER) and Lyft (NYSE:LYFT) have seen their shares plunge over the past couple of months as the number of customers looking for a ride has drastically plummeted. However, like some other industries in the country previously hurt by this lockdown, it seems that the ridesharing sector is staging a major recovery. In particular, Lyft ended up filing and update to the Securities and Exchange Commission (SEC) in which it mentioned that the number of customers it had seen in May had drastically improved over April.
It’s a great piece of news for the company which had previously reported a drastic decline in revenue figures. At the same time, Lyft also said it would be adjusting its projected second-quarter loss, improving the figure a little due to this increase in ridesharing traffic. Instead, the company expects to report a $325 million net loss for the upcoming quarter ending this month, a bit better than the $360 million previously estimated.
“Rides on Lyft’s rideshare platform in the month of May 2020 increased 26% versus April 2020 and were down approximately 70% versus the same period a year ago. Rideshare rides have increased week-over-week for 7 consecutive weeks since the week ended April 12, 2020. In the week ended May 31, 2020 rideshare rides were down approximately 66% versus the year ago period and increased 5.5% versus the prior week,” read the official filing with the SEC. “Recent monthly rideshare ride growth has been stronger in specific cities where restrictions on social activities and visiting business venues have been eased, as well as other select cities.”
While Lyft is still far from being profitable, neither are any of its competitors. Uber has been struggling to make a profit either, with both companies having gone public last year under the assumption that they would be pursuing a growth-centric strategy as opposed to trying to break even. It’s an idea that would have worked out great for the two companies if this pandemic hadn’t broken out.
Shares of Lyft are up 4.7% in after-hours trading on Tuesday in light of the news, while shares of Uber stayed more or less the same. Although it’s expected that Uber also should have seen an uptick in ridesharing traffic if its competitor Lyft did, the company still needs to provide an update to investors in regards to this. Over the past few months, however, most ridesharing companies are still trading at a significant discount from where they were earlier this year. At this rate, however, it’s likely that business will be completely back to normal for both companies later this year.
Lyft Company Profile
Lyft is the second largest ridesharing service provider in the U.S., connecting riders and drivers over the Lyft app. Lyft has recently entered the Canadian market, in efforts to expand its market outside of the U.S. Incorporated in 2013, Lyft offers a variety of rides via private vehicles, including traditional private rides, shared rides, and luxury ones. Besides ride-share, Lyft also has entered the bike- and scooter-share market to bring multi-modal transportation options to users. – Warrior Trading News