Lyft, the ride-hailing firm, may have made a modest impact on Uber’s U.S. market share with its price reductions. However, Uber’s larger competitor continues to perform well, reporting its second quarterly operating profit.
Lyft’s expectations for stronger growth
In the second quarter, Lyft experienced the slowest sales growth in two years. Nevertheless, it anticipates a more substantial growth story in the September quarter due to attracting more riders with lower pricing.
Lyft’s competitive pricing strategy
According to data analytics company YipitData, the average price of a standard Lyft ride was over 4% cheaper than Uber’s similar service at the end of September. This marked a significant change compared to February when both companies were charging nearly identical prices.
Gradual market share increase for Lyft
Lyft has been slowly gaining market share. Since the price war began in January, Lyft’s share has only increased by 200 basis points, reaching 29%. Lyft’s more aggressive pricing strategy under its new CEO, David Risher, has not led to rapid market share gains.
Uber’s operating profit milestone
Uber, with a larger presence and a diversified business that includes food delivery, achieved an operating profit for the first time in its 14-year history in the quarter ending June. For the July-September quarter, it anticipates nearly doubling a key profit metric to $1.02 billion.
Challenges for Uber’s growth
Although Uber remains profitable, its growth has decelerated. In the quarter ending June, Uber’s revenue increased by 14.3%, which is almost half the growth rate of the previous three months. Analysts anticipate that growth in the September quarter will be similar to the previous quarter.
Lyft’s strong performance expected
Lyft is expected to announce an 8.4% increase in third-quarter revenue, a significant improvement over the approximately 3% increase in the second quarter, as per LSEG data. Adjusted core earnings, a closely monitored profitability metric, are anticipated to surge by a quarter to $82.6 million.
Lyft’s focused approach
Lyft has concentrated its efforts on ride-hailing and introduced a new management team with a strong focus. This strategy appears to be having a positive impact on the company’s performance in the ride-hail market.
Future of competition in ride-hailing
Despite Uber’s ongoing dominance in the ride-hail industry, Lyft’s persistent efforts to gain market share through competitive pricing continue to be a factor to watch as both companies adapt to changing market conditions and evolving consumer preferences.