Lyft shares surged more than 25 percent after the ride-sharing giant posted higher-than-expected revenue and vowed to slash costs in order to achieve profitability.
The San Francisco-based rival to Uber reported first-quarter revenue of $955.7 million, up 23 percent year-over-year and well above analyst expectations of $884.7 million. It lost $1.31 per share, or $398.1 million in the quarter.
Lyft shares were recently up 26 percent at $33.
The results offered a first look at the impact that stay-at-home orders have had on Lyft as governments have moved to fight the coronavirus in the company’s largest markets, including New York City.
For April, rides plunged 75 percent from year-earlier levels, but Chief Executive Logan Green said Lyft saw moderate week-on-week growth in ride requests starting in mid-April.
In the US, rides rose 21 percent in the first week of May compared with a low point on April 12. Ridership grew 25 percent in Atlanta, 35 percent in Chicago and 22 percent in New York City between the week ended April 5 versus the week ended May 3.
Green said Lyft had stopped virtually all ride discounts and would be able to reduce costly driver incentives as many unemployed Americans looked for work. About two-thirds of all costs are variable, he said, allowing the company to reduce losses as ridership drops. Green said competitors had also stopped offering rider discounts in recent months.
The company did not say whether it stuck to its goal of being profitable on an adjusted basis by the end of 2021 but on Wednesday said cost cuts would help it on the “path to profitability.”
Lyft last week withdrew its full-year guidance and announced a 17 percent staff cut and implemented pay cuts in response to the crisis.
A Wall Street analyst on Thursday downgraded Lyft’s stock, citing worries that passengers will remain wary of ride sharing over safety concerns for months to come.
Piper Sandler analyst Alexander Potter changed his rating on the stock from “neutral” to “overweight,” and cut his price target from $63 to $31.
The main issue, Sander said, is that “health concerns may discourage riders from quickly returning to the Lyft platform” as coronavirus lockdowns begin to lift across the country.
He pointed out that despite Lyft saying that it saw ridership grow from early April to early May, it was still on track to be a 70 percent year-over-year decline, and said that riders “may remain wary for some time” about hopping in a car with drivers and fellow passengers they don’t know.
With Post wires.
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