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Uber and Lyft earnings previews: Rough road ahead

Ride-sharing companies Uber Technologies, Inc. (UBER) and Lyft, Inc. (LYFT) are scheduled to report earnings this week, following what has been a dismal first quarter due to the coronavirus pandemic. Both are burning through cash at a rapid pace, with neither posting a profit since becoming public companies.

Uber is scheduled to report on Wednesday, with Lyft following a day later.

Financial pressures are starting to take their toll, with Uber furloughing 20% of its workforce while Lyft is shedding 17%. Surprisingly, analysts have maintained high ratings for both companies as they expect business to return in coming quarters.

Analysts see Uber in a better position ahead of its earnings release because the UberEats service has generated a healthy revenue stream thanks to stay-at-home orders. This is despite this week’s announcement from the group where it said it will close UberEats in seven smaller markets — the Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Ukraine, and Uruguay — to focus on “our top Eats markets around the world”.
Lyft debuted a meal and grocery delivery program last month but this is a market niche that is already over-saturated with competitors.

Since going public last May, Uber has maintained a trading range between $36 and $45. A June breakout posted an all-time high at $47.08 before turning tail in a failure swing that broke range support in August. The subsequent downtrend continued into November, when the stock posted a tradable low at $27.55 before gathering strength into February 2020.

Uber shares slid more than 3% on Monday to close at $27.42, while the S&P 500 was largely unchanged.

Meanwhile, Lyft shares fell nearly 9% in Monday’s trading session, closing at $27.03 after the company last week announced plans to lay off 17% of its workforce and furlough nearly 300 others because of coronavirus pandemic’s impact on its business.
Overall, investors are showing a stronger positive sentiment towards Uber due to its wider spread of business. Lyft’s exposure to the North American market has had a negative impact on the company’s profit and share value while Uber has centred its position as a globally dominant brand with its diversification into transporting goods in addition to people with UberEats.
This puts Uber in a better position than Lyft to survive the pandemic, although neither company is likely to reward investors in coming quarters.

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Galina Mikova

Galina is a Hubspot-certified Technical Writer with over 10 years of experience in working with Fortune 500, private investment, banking, FOREX and niche tech companies as well as crypto and blockchain startups. She has a solid background in FinTech and blockchain technology.