Lyft, one of the major players in the ride-sharing industry, has been facing tough times, with an eroding market share, a sliding stock price, a downturn in ridership due to the COVID-19 pandemic, rising costs, and low employee morale. However, under the leadership of new CEO David Risher, the company is making bold moves to revive its fortunes.
Lyft’s CEO, David Risher, took the reins of the floundering ride-sharing company in April 2023. One of the key strategies Risher is pursuing is exploring strategic alternatives for Lyft’s bikes division. Lyft was exploring strategic alternatives for its bike-rental operation, which it had acquired in 2018.
Lyft is looking to sell its bike fleet or forge a partnership with an investor that will give the division a cash infusion https://t.co/mFgwkPD9mB
— WSJ Business News (@WSJbusiness) July 24, 2023
The company is considering selling its fleet or forming a partnership with an investor to infuse cash into the division. The goal is to continue listing the two-wheelers on the Lyft app, ensuring minimal disruptions for riders. While Lyft’s bike-rental operation has been popular in several cities, maintaining the fleet has proven to be expensive and a distraction from the company’s core business.
Market-Share Gains and Cost Savings
Since taking over as CEO, Risher has implemented various measures that seem to be paying off. According to The Wall Street Journal, the CEO has cut off over 1000 jobs since he took over the company. These recent layoffs, and service shutdowns that weren’t yielding substantial returns, helped the company save money.
This then was used to cut ride prices and compete with larger rival Uber Technologies, especially as Lyft’s supply shortage had previously driven prices higher. As a result, Lyft managed to claw back some market share from Uber, leading to a surge in the company’s stock price.
However, Risher insists that the company’s focus is on competition based on service quality, not engaging in a price war.
One way $LYFT has differentiated from $UBER – it has focused solely on rides, instead of expanding to food or grocery delivery. CEO David Risher explains how that impacted the company during the pandemic, plus how the transition from the co-founders stepping down is going pic.twitter.com/Ogwj2NlLFX
— TechCheck (@CNBCTechCheck) July 21, 2023
According to data provided by Bloomberg Second Measure, Lyft’s market share in the rideshare industry stood at 25% in May 2023. However, the report also indicated a concerning trend as Lyft’s sales experienced a year-over-year decline of 6%.
Despite the recent gains, Lyft’s stock still faces challenges. While it has risen by over 19% since Risher’s appointment, Uber’s stock has seen a more significant increase of about 54% during the same period. To attract more investors, Risher aims to set long-term targets, including projecting when Lyft can become profitable.
In 2022, Lyft disclosed earnings before interest, taxes, depreciation, and amortization (EBITDA) amounting to $127 million. However, despite this figure, the company has never achieved a profitable year. Instead, in 2022, Lyft faced a substantial net loss of $1.6 billion, an increase from the previous year’s net loss of $1.1 billion.
Lyft’s financial reports revealed that the company made $4.09 billion in revenue in 2022.
Prior to 2022, Lyft experienced its highest revenue in 2019, but it faced challenges in the subsequent years due to the impact of the pandemic.
Risher has also introduced new features to enhance Lyft’s offerings, including the ability for passengers to preorder airport rides upon landing and giving drivers more control over where they want to drive. With Lyft’s new feature, riders can now pre-order a ride as soon as they land. The process is simple: Lyft will match the rider with a driver as they approach the pickup spot.
This means no more guessing when to book a ride and shorter waiting times at the pickup area. Moreover, preordering locks in the price, ensuring riders won’t be affected by price changes, even if they need extra time to reach the pickup spot. It’s a convenient and hassle-free way to secure a ride and have peace of mind throughout the journey.
On the company blog, Risher said:
Lyft wants to provide the simplest and easiest rideshare experience for travelersWe are solving one of the biggest airport travel pain points for riders. Our new preorder experience will help make airport travel simple, so riders can get where they’re going with ease.
Lyft Customer and Driver Engagement
The new CEO also paid close attention to feedback from drivers and passengers. He even immersed himself in the experience by completing 15 Lyft rides as a driver. This hands-on approach allows him to better understand their concerns and make improvements to the app and services accordingly.
Risher’s commitment to transparency was evident when he publicized his email address and received over 1,000 emails, mainly from drivers, discussing issues ranging from pay to app glitches. He personally responded to most of these emails and directed his team to take necessary actions. His experience as a driver gave him valuable insights, enabling him to address the drivers’ concerns more effectively.
Mixed Employee Reactions
Risher’s approach, however, received mixed reviews among employees. While some appreciate his decisions to cut staffing and shut down underperforming services, others were rankled by his reversal of the company’s remote-work policy and changes to compensation.
Yet, Risher remained committed to his purpose-driven vision and aimed to foster a sense of purpose among Lyft employees, encouraging them to feel like they were making a positive impact on the world. Despite initial discontent, Risher’s engagement with employees and responsiveness to feedback have improved his standing among the workforce.
David Risher’s unconventional background, which includes leading a nonprofit that provides ebooks to school children, has influenced his approach as Lyft’s CEO. He emphasizes making better use of resources and aligning the organization around purpose.
Risher wants Lyft employees to feel that their work contributes to bridging transportation barriers and making a positive impact on the world.
Looking ahead, Risher’s leadership is showing early signs of success. As Lyft seeks to regain its position in the ride-sharing industry, the CEO’s ability to set clear long-term targets and drive sustained growth will be crucial for the company’s future. As he continues to steer Lyft’s turnaround, investors are eager to see how this demonstrates the company’s path to profitability.
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