Uber, Lyft lose 50 percent of core business due to COVID-19

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Uber drivers in California can now set their own prices.

Uber and Lyft have lost roughly 50 percent of their respective ride-hailing revenue because of the coronavirus pandemic, reports The Information. The two San Francisco-based personal transportation companies saw a drop off in passenger bookings because government lockdown orders have greatly diminished the practices of work commutes and leisure travel.

Notably, while the sector is now reeling, one on-demand transportation provider has positioned itself to handle the downturn in business.

Uber and Lyft’s Ride-Hailing Revenue Declines

According to The Information, Uber’s fare revenue, less driver payouts, is estimated to be around $450 million per month. However, in February, the firm collected about $800 million from passengers during the first quarter of last year. Similarly, the publication pegs Lyft’s current taxi service earnings, minus vehicle operator wages, at $150 million, down from its Q1 2019 intake of $260 million.

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In addition, neither ride-share firm expects to recover from COVID-19 disruption for at least a year.

At present, Uber and Lyft haven’t made any layoff announcements, and Uber CEO Dara Khosrowshahi reportedly told his staff none are forthcoming. Nevertheless, Wall Street has seemingly lost faith in America’s two biggest on-demand transportation companies.

Uber’s stock price plunged by 42 percent in the last month and a half, while Lyft’s has fallen by 49 percent.

Why Uber Will Absorb the Impact of COVID-19

Although it’s in a tight spot now, Uber can absorb the impact of the coronavirus pandemic on its business.

Last month, Khosrowshahi said his firm could endure an 80 percent drop in ride-sharing revenue because it has $10 billion in liquidity. Moreover, the corporation’s revenue generation isn’t entirely dependent upon its taxi service as it earns money making meal deliveries via its Eats segment. As opposed to its core business, the company’s food transportation unit has seen a significant uptick in consumer interest.

Government social distancing recommendations have kept people from eating out. Accordingly, Uber Eats experienced a 10 percent surge in U.S. food requests and a 50 percent rise in global orders. But because the corporation derives five times more income from taxi rides than food drop-offs, its financials are still in the red.

That said, Uber recently took steps to diversify its international service offerings. The company inked agreements with French supermarket chain Carrefour to make food, toiletry, and cleaning product deliveries. The corporation has also made similar arrangements with service stations and convenience stores in Spain and Brazil.

Besides, while Uber’s ridership numbers have declined, the firm increased its passenger revenue recently by reducing rider discounts. The company also introduced a feature called Comfort that provides luxury vehicle transport at a higher cost.

Also, Uber and Lyft are developing new policies to revive their core businesses, like post drop off vehicle deep cleanings.

Once a novelty, digital personal transportation services have become part of the fabric of American life. As such, the public’s appreciation for the convenience provided by Uber and Lyft should help both companies make a post-pandemic come back.

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