Though we are now back out on the streets and many restaurants and facilities have reopened, there is still an uneasiness creeping into the psyche that things could all go pear-shaped once more.
How Much Are Ride-Sharing Companies Affected?
The two big names when it comes to needing a quick ride are Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT). In Q1 both companies suffered big time, with their revenue slowing by over 50%. Their stock prices have also taken a big hit, With Uber just recently breaking even for the year while Lyft has fallen roughly 30% in the same time.
Uber and Lyft have very similar business models and launched a number of guidelines to help their workers during the virus outbreak. These include providing free cleaning disinfectants, and Uber has vouched to pay two weeks worth of paid sick leave for drivers. This response still has many employees worried as they have no security beyond this, much like other freelance workers in the current climate.
What Does The Future Look Like For Ridesharing?
Despite the difficult times ahead, both ride-hailing companies do have a good amount of cash in hand. Uber’s CEO Dara Khosrowshani has told analysts that the company has $10 billion of unrestricted cash. Lyft raised $2.5 billion in March last year when shares rose to $72 each. Also, Lyft has no debt which means it is in a pretty strong financial position.
However, there is only so long both businesses are able to rely on their cash before it runs dry. In the second quarter, Uber saw gross bookings of $10.2 billion, off 35% compared to the year-ago period. This resulted in revenue of $2.24 billion, down 29% from a year-ago result of $3.17 billion. Uber’s net loss was $1.78 billion in the second quarter of 2020
It’s likely that Lyft could post even uglier numbers when it reports on Wednesday, 12 August.
This ride-hailing company is expected to post a quarterly loss of $1.57 per share in its upcoming report, which represents a year-over-year change of -130.9%. Revenues are expected to be $338.85 million, down 60.9% from the year-ago quarter.
Is Autonomous Ride-Sharing The Answer?
It would make sense to have a self-driving vehicle getting us from point to point as the viral outbreak affects the globe and we practice social distancing. Alphabet’s (NASDAQ: GOOG) self-driving company, Waymo, halted its services in Phoenix and Detroit because of the pandemic. This is because most of its vehicles still need a real driver to avoid any potential crashes.
Other big names are also being forced to adapt as people look to purchase new vehicles. For instance Tesla (NASDAQ: TSLA) started allowing contractless test drives. It’s hoped the market for greener vehicles will also pick up by the end of April, as many countries begin to recover from the pandemic and lift restrictions.
Is It A Good Time To Invest In Ride-Sharing Companies?
While Lyft is down significantly this year, Uber is at roughly start of year levels but remains unprofitable. For Uber, it may be best to hold out for another opportunity if it drops once more. However, once the pandemic has run its course and businesses start to reopen, the ride-sharing companies will be in hot demand once again.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.
Contributing Writer at MyWallSt
Alsha is a contributing writer to MyWallSt. Alsha’s favorite stock is Shopify because not only does she enjoy a bit of online shopping, but she believes the e-commerce solutions business is going to continue making big gains.