Lyft and Uber Are Moving From Cage-Match to Comfortable Duopoly
The arch-rivals must join forces to survive
It looked like everything was finally coming together for Lyft: After years of bare-knuckled competition with Uber, rising losses, constant struggles with regulators, then a rocky IPO, it had finally gotten on track. “Profitable growth” over growth at all costs was the new management mantra, and the company even had a target: breakeven, at least by its adjusted EBITDA yardstick, as soon as the last quarter of 2021.
And then the coronavirus hit.
Revenue promptly fell off a cliff: By early April, spending on Lyft and Uber was down by half, and the drop in demand continued, with ridership falling by roughly 70%. Lyft cut 17% of its workforce, furloughed another 5%, and cut salaries by 10% to 30% while Uber announced it would be laying off 3,700 employees, or 14% of its workforce.
Last Wednesday, Lyft reported earnings for Q1 2020, reporting losses of $398.1 million and revenues of $955.7 million, up 23% from last year. Lyft also achieved a record-high revenue per active rider in the first quarter of $45.06, up 19%, year over year. The company still grew during the quarter overall but said rides plummeted in April and are only slowly recovering with uncertainty looming ahead. The following day, Uber’s earnings call showed similar trends: The company reported a net loss of $2.9 billion and revenues of $3.54 billion with gross bookings for Uber Eats shooting up by 50% year over year as more consumers ordered meals from home. Uber ridership was down 80% in April, but Eats spending was up 89% for the month.
Now, navigating their way as public companies, it’s possible to imagine Uber and Lyft entering a new milestone, coexisting like Coca-Cola and Pepsi, Moody’s and S&P, or Kellogg and General Mills.
While both companies introduced drastic cost-cutting measures to preserve cash flow as reflected in their layoffs, Uber has displayed more of an offense positioning. The company is exploring new revenue opportunities in app-based retail delivery, and just last week, Lime, the e-scooter and bike startup…