Lyft loses ground on Uber as cost cutting bid fails catch now profitable rival
Lyft shares slip in the US after its aggressive cost-cutting strategy in a bid to steal market share from rival Uber failed to chime with investors.
Shares in the US-listed platform closed around 10 per cent lower, after it noted a drop in total revenue per active user of 5 per cent to $47.51 (£37.21) in the second quarter.
That drop signalled the impacts of a cost-cutting strategy and fare slashing programme implemented by new CEO David Risher, as the firm looks to claw back ground on its larger competitor Uber and overturn a string of poor financial results.
The quarterly results had shown some initial promise with total revenues up three per cent year-on-year to $1.02bn (£798.76m) on the back of an 18 per cent surge in rideshare demand.
Chief Executive Risher said that standard rides had reached their “second-highest-level ever,” and CFO Erin Brewer noted a “solid second quarter,” with “the rideshare market growing.”
However, the announcement was not enough to quell investors’ unease and came just a week after Uber reported its first ever quarterly operating profit of $326m (£254.9m) and issued a bullish forecast for the coming quarter.
Uber’s trips rose 22 per cent in the quarter, against a rise in Lyft’s active riders of just 8.2 per cent.
Lyft itself has wildly underperformed in recent years and its strategy of slashing costs, which saw Risher lay off hundreds of employees in April, has yet to turn around a string of poor financial results.
The San-Francisco based firm has also struggled to recover from the pandemic induced struggles including a crash in demand during lockdown and a subsequent driver shortage, which pushed up fares significantly. Last year, its shares crashed more than 74 per cent.
More recently in February, the companies’ shares tanked near 30 per cent after it forecast lower than expected revenues for the year ahead and cited costs associated with its restructuring strategy.