Lyft reported a worse-than-expected quarterly loss, but beat estimates on revenues. The company also said that it will be forced to suspend business in California if you lose your appeal in court on the issue of re-training their taxi drivers from contractors to regular employees.
Shares Lyft (LYFT), decreasing by 29% since the beginning of the year, first grew after the publication of the report on the results of the second quarter, and then fell after the announcement of the court decision in California to ban Lyft and Uber (UBER) to classify its drivers as contractors.
Lyft’s quarterly earnings, though much decreased, exceeded analysts ‘ expectations, in addition, the company noted strong growth in July.
Loss per share Lyft the second quarter ended June 30, doubled from last year to $1.41, which at $0,42 worse than the analyst estimate of $0.99 loss per share. Total quarterly loss (net loss) amounted to $437,1 million
Total quarterly revenue fell 61% to $339.3 million, but was above average analytical forecast of $336,77 million to See the history of revenues and profits Lyft for the last 2 years can link.
Lyft reported 8.7 million active passengers of his taxi service for the quarter, which is 60% less than the nearly 22 million in the same period last year.
The company also paid $32.1 million in severance and other costs payments to employees as part of its restructuring during the quarter in a pandemic.
Unlike its larger competitor Uber, Lyft does not own a big business grocery delivery or freight transport, which could partially compensate for the loss of the core business of a taxi, severely injured from the effects of the height of the pandemic COVID-19 in the months of April to June.
Lyft launched its delivery service in April of this year, services are available in a limited number of States.
Earlier in December, 2019 the company has also launched a rental service of cars, but in isolation of people at home, the demand for it decreased. Learn more about the article Marketinfo.pro “Lyft launches car rental service through its app.”
Experts call Lyft more vulnerable than Uber at the moment, as the company has significantly smaller market coverage – while Uber does business worldwide, services, Lyft is only available in the US and Canada.
According to the CEO Lyft, Logan green, positive news last quarter was the growth of rental bikes and scooters 200% compared to last year’s value, because of the pandemic, the drivers were seeking alternatives to travel “under the open sky”.
Forward-looking statements
A few cheers were also statements by Lyft about the fact that in July, the company experienced a 78% increase in the number of trips compared to April.
“Despite the fact that the number of trips for the 2nd quarter decreased significantly compared to the same period last year, we are encouraged by the trends to recovery, we begin to see,” said green.
At the same time, Lyft executives said the cuts will allow the company to achieve its goal of becoming profitable by the end of 2021. In April, the company announced the reduction of wages and fired nearly 1000 employees, or 17% of its workforce.
Lyft and Uber can lose a large market share in California
After the California court banned Lyft, Uber and other companies with a similar business model to classify their drivers as contractors, promotions companies has decreased.
John Zimmer, President and co-founder of Lyft, said that the company will be forced to suspend work in the state of California if an appeal from the decision on the classification of the drivers will not be successful. Uber made a similar statement.
The company must submit the appeal until August 20, before the injunction will take effect.
California is the largest market for both companies, but also remains one of the most affected by the pandemic region – a fact that, according to analysts Deutsche Bank, may reduce the financial blow from the potential of temporary stop of business in the state.
According to CFO Brian Roberts, the California market accounts for 16% of all trips on the taxi service Lyft.
Guide to Lyft and Uber are also pinning their hopes on the possible vote of the voters in November the “Suggestion of 22”, which will cancel more stringent requirements on the qualification requirements throughout the state.
“When more than 3 million Californians remain unemployed, our elected leaders should focus on creating jobs, not on trying to close an entire industry in times of economic depression,” – said the representative of the Uber Davis white in the California court.
