Shares of ride-share company Lyft plummeted more than 30 percent on Wednesday, this week, as investors express concern over declining ridership and higher spending. The news comes on the heels of Lyft’s first quarter fiscal report. In this report, the company reported revenue of $875 million in the first quarter; and better top- and bottom- lines across the board.
This is a somewhat astonishing 44 percent increase from the same period last year. But while revenue may be higher, other metrics are not quite so impressive. For example, the current active ridership of 17.8 million failed to meet what analysts had expected. On top of this, there are concerns that the company is spending too much of its subsidies on attracting drivers to the platform. This has actually registered as a $196.9 million net loss for the same quarter.
All this in mind, Lyft stock traded at $20.33 per share, which is decline in value of nearly 34 percent.
Apparently, Lyft does not consider this to be of major concern as they anticipate quite an impressive recovery. In fact, the company has expressed their faith that ridership will definitely increase as the global economy continues to recover from the depths of the pandemic; and with it, the lessening of pandemic restrictions. Accordingly, Lyft plans to spend more on driver incentives as a means to retain contractors that will be able to manage any sudden bump in said ridership.
Lyft chief executive Logan Green notes that adjustments to driver supply is a massive task which relies on factors that can change quickly and without warning. On a call with investors, he goes on to say, “We fell very confident that this is the right time to put a little extra investment behind ensuring we’re ready to handle that demand and that we’re there providing the best service levels we can.”