Rideshare companies like Uber and Lyft were starting to explode in popularity before the COVID-19 pandemic. However, things look far less promising for the industry in today’s age of social distancing and virus precautions. It’s clear that 2020 was a difficult year for companies in the space, but it appears that things might not be as bad as they seem.
Both Uber and Lyft, despite hemorrhaging huge amounts of money last year, are inching closer to being profitable, The Verge reports. That’s a big step in the right direction considering that 2020 saw drastically fewer rideshare trips than 2019. Even so, it might not be enough to save Uber and Lyft in the long-run.
Uber Goes Wide
Although both Uber and Lyft are widely recognized as the top rideshare services, Uber is certainly larger. That’s because it has evolved into being more than just a rideshare company. Uber has recently invested in other spaces, like food delivery and even freight transportation.
To date, the company has never turned a profit despite being founded more than a decade ago. In 2020, it continued to lose billions, reporting a net loss of $6.7 billion on the year. At face value, that figure is appalling. However, it is actually good progress for the company considering that it lost $8.5 billion the year prior.
Interestingly, Uber brought in less revenue in 2020 than it did in 2019, with amounts of $11.1 billion and $13 billion respectively. The biggest reason for that drop is due to the fact that Uber’s platform had two billion fewer trips last year than the year before.
Part of what is helping the company stay afloat amid the pandemic is its diversification. Uber’s food delivery segment continues to perform well and has seen a boost since the start of the pandemic. The company has also started to dabble in grocery delivery. That market is currently in the midst of a boom thanks to COVID-19.
Lyft Stays Small
While Uber’s approach to weathering the pandemic has been to diversify, Lyft has done the opposite. The rival rideshare service doesn’t have a food delivery segment to rely on and also isn’t as big as Uber. For once, that has turned out to be a good thing. It has helped Lyft avoid losing so much money as it tries to wait-out the COVID-19 pandemic.
Even so, the rideshare company still incurred significant losses for the year. Its annual net loss amounted to $1.8 billion. Like Uber, that is a decrease since the year prior, when it lost $2.6 billion.
Lyft saw its adjusted net revenues drop 44 percent year-over-year as a result of the pandemic and saw its monthly active user numbers drop by about 10 million.
To help reduce costs, Lyft has had to get creative. In select markets, it has limited new drivers from joining the platform in order to keep supply proportionate to demand—which remains significantly decreased.
Moving forward, it’s unclear how much more Uber and Lyft will be able to take. Even less clear is a path to profitability for either company.