For Ride-Hailing Companies, It’s Been a Rocky Road
COVID Easing, Gasoline Rising
Ride-hailing companies took a hit during the pandemic as people stayed home and practiced social distancing. At the same time, drivers dropped off their platforms. With those headwinds now easing, the sector faces new problems. The Russia-Ukraine war triggered spikes in oil prices, making it more costly to drive. Since drivers pay for fuel, the gig may be losing its appeal.
While facing these challenges, ride sharing companies have posted mixed results.
Uber Is Optimistic. Lyft, Less So.
Uber reported first-quarter revenue growth of 136% from the previous year, but a net loss of $5.9 billion during the same period, attributed mostly to equity investment losses. Growth came primarily from rideshare bookings, which were up over 58% year-over-year. Uber expects its driver base, which is at its highest level since the pandemic, to continue to grow. The company doesn’t anticipate needing to offer drivers significant deal-sweeteners and predicts “meaningful positive cash flows” in 2022.
Lyft has reported a less rosy outlook. Though the rideshare company’s first-quarter results beat on both the top and bottom lines, its share price tanked due to a subdued outlook. The company predicts added expenses for driver incentive programs amid high gas prices, in addition to increased spending on marketing and tech.
DiDi Buffeted by Potholes
Looking at all of the ride-hailing companies, it seems China’s DiDi is struggling the most. The company was put under investigation by Chinese regulators shortly after going public last June as a result of alleged cybersecurity concerns. Its app lost the ability to be downloaded in the country. In December, DiDi announced its plan to delist from the New York Stock Exchange.
As these ride-sharing platforms navigate a series of industry-wide challenges, it remains to be seen which can safely drive around the obstacles.
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