Uber Technologies (NYSE:UBER) and Lyft (NYSE:LYFT) released their quarterly earnings last week, and although the companies are showing signs of improvement, the pandemic has continued to cast a cloud over the ride-sharing business.
Uber and Lyft reported significant losses in 2020
As a result, this raises questions regarding how the companies, which are yet to turn a profit will claw out of the financial pit the pandemic has cast in them. In the last three months, Uber reported that it lost almost $968 million, with its adjusted net revenues dropping 16% compared to Q4 2019. The company posted a net loss of $6.7 billion for the whole year, which was slightly down from the $8.5 billion loss posted in 20219. Revenue was down from $13 billion in 2019 to $11.1 billion in 2020, likely attributed to completing only 5 billion trips in 2020.
On the other hand, Lyft reported a loss of $458.2 million in Q4 2020, with adjusted net revenues dropping around44% YoY. The company lost $1.8 billion for the whole year compared to a $2.6 billion loss in 2019.
With the spike of COVID-19 cases in the US, the companies began losing a considerable portion of their customers as people stayed at home. Interestingly, even those that were going out chose not to use ride-sharing apps. Uber indicated that it had 93 million monthly active customers, including those that request at least one ride or order one meal on Uber Eats, a 16% YoY drop. Equally, Lyft reported a 45% drop in monthly active customers to 12.4 million in 2020 from 22 million in Q4 2019.
Uber’s strategy focuses on growing performing business segments
Although ride-hailing companies offer almost the same services, they have different business stabilization strategies. Uber’s strategy involves growing its business segments that are performing well, such as grocery and food delivery, while dropping line items that do not create significant revenue. Recently the company acquired Postmates for $2.65 billion and Coronershop and sold off its autonomous, micromobility, and aerial taxi business.