Ride-sharing services Uber (NYSE:UBER) +3.66 percent and Lyft Inc. (NASDAQ:LYFT) +2.49 percent have been under pressure from investors to reduce their losses since customers are taking fewer trips and drivers are still in short supply. The YipitData market research business found that the average Uber and Lyft fee in the United States was at an all-time high last month due to a lack of drivers and high gas costs.
At least 20% fewer customers were served, and 35% fewer journeys were recorded in the first quarter of 2019, according to YipitData data. The firms had hoped that the pandemic-linked unemployment benefits would be abolished last year, but the demand for drivers continues to outstrip the supply of available workers.
Analysts and investors are concerned about whether Uber and Lyft can continue operating at their present levels without losing money. Customers may divide the cost of their trip by using new ride-pooling tactics being tested by ride-hailing providers.
Lyft, which currently employs a large number of drivers to meet the demands of its clients, is seeking to expand its workforce by partnering with local taxicab companies. When it comes to Uber’s personnel, the company has formed a partnership with its erstwhile competitor, the taxis. To encourage drivers to put in more effort, Lyft intends to increase the compensation drivers get.
The stock price of Lyft has dropped by over 65% in the past year, while the share price of Uber has dropped by more than 50%. Nasdaq Composite Index has lost less than 20% as corporations seek a new equilibrium between expanding their consumer bases and generating a profit. For the first time, Lyft has launched an advertising campaign to promote its bike rental service.
Uber unveiled new features this week to simplify and lower the cost of booking a trip. Individuals may use Uber discounts to offset the cost of their transportation to weddings and other special occasions. These new features from Uber make it simpler and more affordable to get a ride.
For some years now, both Uber and Lyft have advertised special deals that help customers save money on their rides. To promote the tens of millions of people who used their services, these organizations had to endure substantial losses by providing free transportation. The organizations had to alter their approach after becoming public in 2019 since they were losing money.
There was a lack of riders at first and subsequently a lack of drivers. Driver shortages after the epidemic hurt the profitability of the firms. When gas costs rose last year, ride-hailing services like Uber and Lyft raised their fees. Consequently, prices remained flat last year before skyrocketing once again this year. Riders have to pay a new fee to help drivers.
There is no evidence to support the belief of both Uber and Lyft that fares will reduce soon; both companies have said that this is unlikely to happen. Three million consumers were lost to Lyft during the first quarter of this year, a 13% decrease from the same period last year.
Uber said that it had lost at least 20% of its passengers in the United States during the time, although claiming that the number of passengers in April was roughly pre-pandemic. Ride-sharing has become a luxury for some consumers who previously relied on it daily.
Short-distance travel is now being handled by the bus rather than Uber or Lyft, according to Sharan Godya, a 31-year-old resident of San Francisco. Trip volume and ridership are expected to rise despite increased rates, according to the firms.
Although the United States was struck harder by the current Omicron wave than other nations, the firms claim their income has gone back to pre-pandemic levels due to the rise in fares.
The firms hope that shared transportation would entice passengers on a budget to return since the United States was the most impacted. Earlier this year, Uber reinstated shared rides in Miami, and it aims to do so in 15 other cities by the end of the year. Earlier this month, Lyft reinstated them in some locations, including San Francisco.
Uber has teamed up with conventional taxis in various locations to expand its driver pool and reduce expenses. Both companies agreed not to extract too much money from bonuses to avoid spending too much money on incentives to recruit drivers. Because gig workers now have so many options for employment, cutting down on benefits might result in a loss of talent.
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