More Falls for Lyft?
Lyft announced a $266 million loss in their earnings report yesterday. Revenue was down 61% from a year ago as demand has declined amid the COVID-19 pandemic.
While the loss was quite significant, the company actually beat earnings estimates which expected a loss of over $300 million. Lyft believes that things could be getting better soon as individual mobility increases, and the company reported that rides in July were up 78% compared to rides in April.
The poor earnings report was not the only event that caused Lyft to grab headlines yesterday. A few days ago we discussed how a California court ruled that Lyft and Uber should classify their drivers as employees rather than as independent contractors.
Lyft president John Zimmer responded to that ruling by saying that Lyft will consider suspending service in California if the ruling is not overturned. Uber also made a similar statement.
This will be an interesting battle to follow. Sixteen percent of Lyft’s business comes in California, so suspending service there would be incredibly damaging to a company already going through difficult times. However, lawmakers could face backlash if two companies that are so important to transportation suspend service.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.