Despite a strong January-March performance, Lyft Inc. (LYFT.O) forecast a disappointing second quarter on Thursday, casting doubts on its ride-share turnaround amid competition from Uber.
After-hours trading slumped 11% as sales and core profit predictions for the upcoming quarter were below expectations. Uber’s global reach and varied income sources like freight and delivery have surpassed Lyft’s revenue growth for multiple quarters.
Under new CEO David Risher, Lyft slashed jobs last month to decrease expenses, prompting the gloomy prognosis.
“We view the guidance on the bottom line to be extremely disappointing after the announced cost cuts and given recent execution from larger peer Uber,” said CFRA Research analyst Angelo Zino.
Risher said the firm should be a “strong second player” in the North American ridesharing industry by the end of the year and save $330 million through cost reduction.
“We’ve seen really nice growth, our share is now north of 30% and earlier this year it was sort of in the mid-to-high 20s,” he told Reuters.
Lyft gained 10% more riders in the first three months of 2023 after cutting rates.
Revenue grew 14% to $1 billion, above projections of $981.4 million but behind Uber’s 72% growth. As a global leader, Uber has capitalized on this year’s travel demand comeback from a pandemic-induced slump.
Despite a 13.2% cost increase to $1.22 billion from a year earlier, Lyft’s adjusted core earnings of $22.7 million above Refinitiv data’s $12 million forecast.
Its current quarter sales and core earnings forecasts were below market estimates.
The business forecast sales of $1 billion to $1.02 billion, behind predictions of $1.08 billion, and core earnings of $20 million to $30 million, well below $49.3 million.
