Lyft Pays the Price for Tunnel Vision

Lyft's 2020 has been a Lead balloon
Charlie Richardson
27 February 2021
Lyft Pays the Price for Tunnel Vision

What happened and why Lyft's 2020 has been a Lead balloon. Specialising in getting peeps from A-to-B hasn't done the ride-hailing challenger too many favours but the company's financial position is improving. Lyft (+27.35%) shared third quarter numbers that showed a +44% jump in riders compared to the previous quarter but it is still down 22 million riders from 2019. Low riders, means big losses. The company managed to chalk up $500 million in revenue but with spiralling costs, the third quarter still sapped $460 million from the company's books. As Lyft went into reverse, their full-throttle rival, Uber (10.48%), has kept its foot down. And unlike rival Uber - which has made up for the pandemic pasting in the ride-hailing game with spikes in food delivery - Lyft's parachute had some gaping holes. Only last week, Uber updated the market with a stomach-able -18% shrink in sales compared to last year. It turns out, fortune favoured the brave... Expanding stomachs... As UberEats went around the houses in search of a food-delivery partner, they finally settled on Postmates, costing the company $2.7B, while their own demand doubled in lockdown. Gotta get around... Uber's portfolio is growing. Uber Freight's, the company's gig trucking business is one of the fastest-growing logistics businesses in the world and is now worth $3.3B. Uber also has Uber Air (helicopters) and a major stake in Lime, who are relaunching Jump’s electric bike-share service in London, in its first move since acquiring the struggling bike brand from Uber. So Lyft had to do something... and the company is in the “early days” of building our a delivery business to take on Uber Eats (well, sort of). The company's founder and president, John Zimmer, is keen to take their pandemic learnings forward to expand their delivery business. Lyft's pitch: give the retailers better terms on delivery and make this a pure logistics play - rather than the marketplace model of UberEats and Deliveroo. And investors liked it... Lyft shares jumped +4% as Lyft re-pledged its target of having a positive quarter. Yep, thats' right, profit. Believing they could still hit the black with 30% fewer rides than expected.
| The Takeaway Lyft's pandemic pain is very much there for all to see. Just 10 days ago the stock was down -47% for the year but the recent bounce - thanks to news of a vaccine, Prop 22 relief and company re-jig has left the stock price just 16% off year highs. Lyft logistics is still a WIP with scooter sharing deliveries still in pilot. For the time being, Lyft remains the ride-hailing purest. And that needs a shot in the arm.