Lyft predicted drivers will ditch food delivery apps and come back to ride-sharing as passenger demand increases with the end of lockdowns, claiming drivers missed the “camaraderie and meaningful interactions” that came with transporting people rather than meals.
The latest earnings from the company — which, unlike its rival Uber, does not have a food delivery app of its own — showed it has continued to struggle to attract drivers.
John Zimmer, Lyft president and co-founder, said rider demand had outpaced available drivers since late February — a problem also experienced by Uber, which announced a $250m “stimulus” payment for drivers last month.
But he said expiry of federal unemployment benefits in the third quarter would also help solve the problem, as would the return to normal life from the continued rollout of vaccinations.
Zimmer argued that as demand returned, rideshare represented a better deal for workers than food delivery, adding “Rideshare also offers a fundamentally different experience, with social interactions that are largely absent from food delivery.
“After a year of social distancing, drivers are telling us they crave these in person conversations. They miss the camaraderie and meaningful interactions they have while using Lyft,” he said.
Lyft said consumers were willing to pay higher prices, offsetting the cost of the added incentives required to get drivers back on the road.
The number of passengers using the platform in the first quarter of 2021 was up 8 per cent on the previous three months, though both ridership and revenues were still down by more than a third on pre-pandemic levels.
For the January-March period, Lyft posted revenue of $609m, down 36 per cent on the same period last year, but stronger than Wall Street’s estimates of $558m, according to FactSet.
Lyft’s net losses for the quarter came in worse than expected at $427m against expectations of $320m, according to Capital IQ estimates, though the loss contained more than $300m in one-off payments, Lyft said. It included $180.7m in stock compensation related to its 2019 initial public offering.
The company’s adjusted Ebitda losses were $73m, a strong improvement on the $139m analysts had expected, and the lowest Ebitda loss since the company went public.
Hitting the company’s goal of Ebitda profitability in the second half of this year relies on rebalancing the supply of drivers to riders.
The company said the current mismatch meant surging earnings during April for the drivers who had returned, with average hourly earnings of $30 per hour, before expenses, in its top 25 markets.
Lyft’s share price was up by more than 5 per cent in after-hours trading.