Ride-hailing company Lyft saw its shares drop 13 percent on Monday after reporting its third-quarter earnings results alongside weak guidance for revenue. According to analysts, the ride-hailing company is losing market share to Uber. A week ago, Uber reported better-than-expected third-quarter earnings results and also issued strong guidance for the ongoing quarter. Uber’s revenue for the third quarter came in at $8.34 billion, beating the $8.12 billion that analysts had expected, according to Refinitiv. According to a statement by CEO Dara Khosrowshahi, the company had a strong quarter and benefitted from the boom in travel, reductions in lockdowns, and a shift in consumer spending. The company expects fourth-quarter gross bookings to experience a growth of between 23 and 27 percent year over year on a constant currency basis. It also expects an adjusted EBITDA of between $600 million and $630 million. Analysts, on the other hand, expect an adjusted EBITDA of $568 million for the fourth quarter, according to Refinitiv. It is pertinent to add that Uber has the largest market share, operations outside of the US, and benefits from its food delivery operations.
In the third quarter, Lyft saw its active riders increase by 7.2 percent to 20.3 million, the smallest growth the company has reported so far this year. Lyft missed analysts’ estimate of 21.3 million, according to FactSet.
The company, however, reported the highest growth this year for revenue per active rider which increased 13.7 percent to $51.88.
Analysts had high expectations for Lyft, especially after its rival Uber reported an impressive third quarter. According to Nicholas Cauley, an analyst with Third Bridge, “Lyft is losing market share to Uber because it lacks the cross-platform offer Uber has built through ride-sharing and Eats.”
While on a post-earnings call with analysts, Lyft executives said that they were not witnessing any concerning macro trends going into the fourth quarter. They also added that they were betting on cost-cutting strategies, which includes reducing its workforce, closing some offices, etc. They also said that they were looking to demand to boost profitability and growth.
Lyft expects revenue to come in between $1.15 billion and $1.17 billion in the fourth quarter. Analysts expect fourth-quarter revenue of $1.17 billion, according to Refinitiv. Lyft expects EBITDA for the fourth quarter to come in between $80 million and $100 million. Analysts expect EBITDA for the fourth quarter of $84.5 million. The company highlighted higher insurance rates as one of the factors that may have an impact on its results this quarter, as it pays for its drivers’ insurance. “It’s more of a cost-cut-driven beat than a growth-driven beat,” Tom White, an analyst at D.A. Davidson noted.