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Lyft is facing an existential crisis

New Lyft logo in the lobby of Lyft headquarters on Monday, November 14, 2016, in San Francisco, Calif. (Photo By Liz Hafalia/The San Francisco Chronicle via Getty Images)

It was a over a decade ago when Lyft—complete with its signature pink mustache—started offering what were then characterized as friendly carpools in San Francisco, eventually helping to revolutionize transportation by making it possible to flag rides using an app. 

Now, the San Francisco-based company is facing an existential crisis as it trails its much larger competitor, Uber, amid ongoing questions about the long-term viability of ride-hailing as a business. Since the pandemic, some analysts have questioned whether Lyft can survive as an independent company. 

John Rushworth mounts Lyft's then-signature pink mustache on the dashboard of his car on Friday, Nov. 22, 2013. (Photo By Paul Chinn/The San Francisco Chronicle via Getty Images)

In March, Lyft’s co-founders—former CEO Logan Green and president John Zimmer—said they were stepping back from day-to-day operations at the firm, whose share price is now hovering at about $11 since going public in 2019 at $72 per share. 

David Risher, a former Amazon executive, was named CEO and is rolling out a strategy intended to turn the lagging firm around. The company’s earnings report—and additional details on his turnaround plan—are expected to be released Thursday after the market closes. 

Days after taking over as CEO, Risher announced a restructuring that includes laying off nearly 1,100 employees. In addition to a $3.25 million signing bonus and a $725,000 salary, Lyft awarded Risher an incentive package that could eventually net him $980 million if the stock hits a number of successive price targets. In an interview with Associated Press, Risher described the layoffs as necessary to bring Lyft’s prices down to better compete with Uber. 

At the beginning of the pandemic, both companies faced similar existential threats: a drastic pullback in driver and rider demand, not to mention a shutdown of many of the places their services took people to. 

On March 20, 2020, Uber and Lyft’s share prices stood practically at par. More recent performance shows a clear chasm between the two.

In a March note to clients, Wedbush Securities analyst Dan Ives called Lyft’s financial results in the preceding six months “a train wreck.”

“Mr. Risher has his work cut out ahead as we believe all options are now on the table for Lyft including a potential sale,” wrote Ives. 

Fork in the Road

As Sergio Avedian, a senior contributor at The Rideshare Guy and a former securities trader, put it, “Wall Street has only one scoreboard.”

Both companies use an “adjusted earnings” metric in their financial reporting, which does not conform to generally accepted accounting principles. But even that numerical sleight-of-hand shows a distinct gap: Uber posted an adjusted “profit” of $1.7 billion last year, while Lyft reported a loss of $406 million.

Uber has also been slowly eroding Lyft’s market share. According to data from Bloomberg Second Measure, Uber earned 76% of U.S. consumer spending in March 2023. That’s up from 73% in January 2022.

That’s partly due to the faster post-pandemic comeback of Uber’s business compared with Lyft’s. Mobile tracking data compiled by wireless network testing firm Global Wireless Solutions found that Lyft’s driver app now averages about 400,000 daily usages—half its pre-pandemic levels—while Uber’s driver app boasts about 1.4 million daily users, roughly the same number that it had leading up to the pandemic.

The gap can be partially explained by a difference in corporate strategy. Uber has invested hard in diversifying its business. Besides rideshare, the company offers food delivery through Uber Eats, transportation and logistics through Uber Freight and product deliveries through Uber Connect.

Lyft/Bay Wheels bikes wait to be taken from the station attached to the Mission District SFPL on Jan. 28, 2022. | Camille Cohen

Meanwhile, other than limited entries into alternative transportation like electric scooters and bike rentals, Lyft has focused on its core ride-share business. 

And Lyft is only active in North America, while Uber operates in more than 70 countries around the world. This provides a level of scale that’s hard to compete with, particularly in a tight funding environment.

“When rates were a lot lower and access to funding was greater, smaller players can normalize the playing field a little bit by being more aggressive to promote driver or rider acquisition,” said Nikhil Devnani, an analyst with AB Bernstein financial services. “The world has changed a lot since then.”

Devnani added that Uber invested in an aggressive—and expensive—driver expansion plan starting in 2021 that hurt the stock in the short term, but has now led to a better and more consistent supply of drivers on the platform.

“Plus, when drivers have come back, they’ve been busier on Uber,” Devnani said. “You lean into the platform that keeps you busier.”

Bumpy Ride 

Risher, Lyft’s CEO, said part of the reason for the deep job and cost cuts was to bring fares down to be competitive with Uber and bring driver pay up. 

“It’s very important to our customers that when they open both [the Uber and Lyft] apps that they are not surprised by the prices being super different,” Risher told the Associated Press. “We want to be in line with where Uber is.”

Lyft CEO David Risher poses for a photo at the company's headquarters on Wednesday, March 29, 2023, in San Francisco. | Michael Liedtke/AP Photo

The pressures on Lyft have led to rumors that the company is gearing up for a sale to a larger company, but Risher said restoring Lyft’s financial footing takes precedence. In 2016, General Motors reportedly offered to buy the firm but was declined. More recently, New Street Research analyst Pierre Ferragu speculated last year that a merger between Lyft and DoorDash would make sense.  

Lyft didn’t respond to a request for comment on its turnaround strategy and whether it’s exploring a sale. 

Avedian has done around 10,000 trips for Uber, Lyft and delivery apps like DoorDash, but he’s found himself spending an increasingly smaller amount of time turning on Lyft. 

“The only time I use it as a driver is to fill in the gaps,” Avedian said. “Management decided to be a one-trick pony, and they’re paying the price for it.”

Uber’s scale also allowed them to undercut Lyft on fare prices while also paying drivers a premium to keep them on the platform. Although Risher said he is attempting to cut costs down, too, Avedian believes there’s only so much cutting you can do without cannibalizing the business.

“It’s literally David versus Goliath, and the new CEO’s name is David, so it’s kind of a perfect comparison,” Avedian said. “You’re competing with Uber, who literally has five different levers to pull and can do anything you do better or cheaper.”

The Associated Press contributed to this story.

Kevin Truong can be reached at
Annie Gaus can be reached at

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