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Lyft stock price started to rise yesterday after hours when the company revealed its Q1 report. The numbers are still not very impressive but Lyft is doing better than expected.
Lyft Inc (NASDAQ: LYFT) stock price is rising today in the pre-market. This is believed to be a result of the release of its earnings report. The ridesharing company is performed better than expected.
The numbers though in the red due to the coronavirus outbreak were better than expected. There was an expected loss (adjusted) of 62 cents per share. The actual losses though were $1.31 per share. What makes Lyft’s performance interesting is that a year ago losses were at $9.02.
Lyft (LYFT) Stock Price Up After Hours and in Pre-market
Lyft (LYFT) stock yesterday jumped as high as 17% during after-hours trading. At the time of writing, in the pre-market Lyft (LYFT) stock price is $30.29 (+15.96%).
This means that Lyft is doing better than last year. besides this, the coronavirus situation has dampened business for the rideshare company. GAAP losses were at $398 million vs $356 million in Q4. The COVID-19 pandemic has slowed things down.
While the long-term value doesn’t seem to have harmed Lyft, the shelter-in-place policies have slowed business. Lyft has a strong market concentration in the United States. This has made the outlook, for now, to seem dire.
There was an improvement in the number of active riders. The number from last year rose by about 3%. This again means that the core business model of the company is quite strong.
COVID-19 Hits Lyft Hard
Lyft co-founder and CEO Logan Green during an earnings call on Wednesday confirmed the impact of the coronavirus. He said that COVID-19 had a “profound impact” on Lyft’s business. he also said that rides were down by 75% throughout April and 70% last week.
Green also listed cost-cutting measures that had been instituted by the company. 1,000 workers were laid off last week. This reduced the human resource count of the company by about 17%. 300 workers were also furloughed.
Non-time-based employees had their pay cut by 10% to 30%. Lyft has also given indications that the board of directors will give up 30% of cash compensations in the second quarter of this year.
Lyft executives also said that there may be no need for further downsizing. To save money, all savings and discounts within the Lyft ecosystem have been switched off. Spending on driver recruitment has also been stopped. When rider demand rises, these activities are expected to resume.
Lyft’s self-driving business unit has also been affected by the job cuts. Green has said that research and development in the business unit will continue. He said:
“Our investments in AV are critical to Lyft’s future and we expect they’ll deliver strong returns in the future despite COVID.”
Pundits expect that artificially intelligent self-driving cars are the future. Rideshare companies will be profitable because of this. This won’t be without challenges.
Challenges are the stepping stones to further success.