Lyft shares skid 35% over fears that Uber is speeding ahead

Lyft shares fell 36% on Friday after a bleak forecast fueled worries that the corporate should minimize costs and sacrifice revenue to keep away from being a distant second to rival Uber within the North American ride-sharing market.

The businesses have been locked in a battle for market share coming off the pandemic lows, with newest earnings exhibiting Uber’s world presence and extra diversified enterprise had been giving it an edge over rideshare- and US-focused Lyft.

“Uber advantages from having a world rideshare mannequin, and worldwide markets have been faster to bounce again than the USA,” Bernstein analyst Nikhil Devnani mentioned.

“As the larger platform Uber is ready to supply extra quantity for drivers, not solely inside rideshare, but additionally now with (meals and grocery) supply.”

Lyft shares had their worst day on file, with 13 analysts reducing their value targets on the inventory. The corporate erased about $2 billion in market worth and practically all of its share value positive factors this 12 months.

Lyft on Thursday supplied first-quarter revenue and income forecasts that had been beneath market expectations, a stark distinction to Uber’s sturdy revenue projection and better-than-expected earnings.

“This outlook continues the current development of Lyft rising slower than the broader rideshare market,” Canaccord Genuity mentioned, including that enhancing driver provide will stress the corporate’s pricing.

Drivers have returned to ridesharing firms in current months as they search for a constant earnings stream in a weak financial system, permitting Uber and Lyft to chop again on incentives.

Driver provide at Lyft within the fourth quarter was on the highest stage since earlier than the pandemic in 2019, whereas Uber’s driver provide was at a file excessive.

However the larger provide signifies that Lyft will see lesser surge pricing within the first quarter, which is able to hit its income.

The corporate lowered costs in January after Uber dropped its gasoline surcharge earlier that month, and analysts mentioned Lyft’s bigger presence on the West Coast was additionally a drag as many expertise firms there haven’t returned to workplace.

“Lyft is making the tough trade-off to cheaper price with the intention to assist conversion and forestall additional share loss to Uber,” brokerage Needham mentioned.

“Regardless of the constructive commentary on demand, we don’t assume quantity will have the ability to offset decrease costs.”

Lyft mentioned in November it would lay off 13% of its workforce in a bid to chop prices. Uber has to date averted such a transfer.

The inventory closed Friday down $5.91 to $10.31.