Lyft’s new CEO may eliminate shared rides again to focus on its ride-hailing business and become profitable.
Lyft’s new CEO David Risher warned TechCrunch that additional functions might be cut. For example, he claimed the Wait & Save option, which lets riders in some locations pay less by waiting for the best-located driver, may disappear.
The former Amazon executive Risher told TechCrunch, “It’s feasible that maybe we don’t need both of those anymore and can focus all our energies on doing a lesser number of things well. “Maybe it’s time to say the shared rides were terrific for a while, but let it go.”
In 2014, Logan Green and John Zimmer developed Lyft, a shared transportation service. Uber Pool debuted that year. After the epidemic, both firms resumed carpooling. However, Uber and Lyft have typically lost money on carpooling to entice customers with low prices.
The proposed move is one way Lyft’s new management intends to reduce losses and eventually take market share from Uber, its major competitor and often-described big brother. However, Risher says Lyft won’t expand delivery or sell the firm, so it’s returning to fundamentals.
“Focus on ride-share essentials first,” Risher added. You can’t lose a share of your competitors in a competitive market if you want to survive. I like this duopoly. In many other marketplaces, customers, and drivers demand options. It keeps us honest and lets us joke around.”
In recent years, Uber, a larger firm, has stolen more U.S. market share from Lyft by offering food delivery and transit services. According to YipitData, Uber’s market share has increased from 62% in 2020 to 74% currently, compared to Lyft’s 26%.
March 2019 saw $24 billion Lyft go public. Lyft is worth $3.35 billion. Uber is $60.44 billion. Risher’s hiring instantly boosted its share price to $10.14. Unfortunately, the good response was short-lived. Lyft fell 11.4% from Tuesday’s peak to $8.98 on Wednesday.
At D.A., TechCrunch quoted Davidson as neutral on the firm with a $12.50 price target.
“We’ll confess the announcement came as bit of a surprise to us, but perhaps it shouldn’t have given the relative underperformance of LYFT shares and Lyft’s core ride-sharing business in previous quarters,” said White.
Risher’s appointment didn’t impact Lyft’s Q1 2023 revenue projection, although analysts noted that the aim ($975 million) was lower than projected ($1.09 billion).
Colder weather causes fewer ride-hail rides, shorter journeys, and a dramatic drop in micro-mobility usage, according to Lyft. However, as Lyft only operates in North America, it cannot offset bad patronage in one chilly region with greater usage in warmer regions.
Risher has excellent motivations to turn Lyft around, even though its plan lacks the glitter of sparkling new goods that may directly compete with Uber (aside from the pride of a job well done).
Ben Silverman, director of research at investment research management firm VerityData, reported that new CEO John Risher earned 12.25 million performance-based restricted stock units, divided into nine tranches, each vesting independently at LYFT price barriers from $15.00 to $80.00. “The vesting timetable is considerably different from the founders’ rewards obtained by Logan [Green] and [John] Zimmer in 2021 and 2022, which only vest if LYFT achieves or surpasses $100.00. That ambitious image has faded. Risher must complete a tremendous turnaround to earn $980 million.
