Lyft is (finally) back with plunged earnings and a possible suspension
Welcome baaack... Lyft has been hiding in the garage this year, with little to zero newsworthy updates to speak of. Yesterday, it made two big headlines (neither were particularly flattering). The 1st was unsurprising — everyone and their grandma expected rides to take a pandemic plunge:
- Lyft's sales plummeted 61% in the 2nd quarter as virus fears kept riders away (there was nowhere to Lyft to, anyway). Lyft had 8.7M active riders compared to 21M+ in the previous quarter.
- Rides jumped 78% in July compared with April, suggesting a recovery might be underway this quarter. But Lyft still has a long trip ahead (ETA: unknown).
It gets worse... A judge just ordered Lyft and Uber to treat CA drivers as employees instead of independent gig contractors. The ride-hail giants would have to provide benefits like overtime and sick leave, making employees (and rides) more expensive. They say that threatens to put them out of business.
- Lyft and Uber may shut down rides in California temporarily if the ruling isn't overturned. That would be tough for the many CA'ers who have never called a taxi in their lives (#UberEverywhere).
- The suspension would likely last until November, when voters decide on a ballot measure that would exempt gig drivers from being considered employees.
- But while Uber has a global footprint, US-focused Lyft depends on CA for 16% of its rides (not coming in clutch RN).
Lyft needs to do more... It's mostly a pure-play rides company, which doesn't help in a pandemic. Uber's Ride bookings similarly plunged 73%, but its Eats delivery bookings surged 113%. Lyft doesn't have a pandemic-friendly biz to hedge ride losses. Last quarter, Lyft forayed into grocery and meds delivery, and saw growth with its bike-sharing biz. It needs more of that.