This week, investors will get a closer look at just how badly the coronavirus pandemic is impacting the ridehailing industry.
Lyft (LYFT) - Get Report reports its March quarter results on Wednesday, followed by Uber (UBER) - Get Report on Thursday. And investors are expecting rides for both to be greatly diminished as U.S. and global consumers sheltered at home.
Shares of Lyft slid 10% on Monday to $26.53, and are down close to 40% year to date.
1. Coronavirus Impact
For investors, the first order of business is to get a sense of just how much the pandemic has reduced overall rides. A dramatic drop in airport trips, the closures of restaurants and other destinations and stay-at-home mandates led Lyft to revoke its guidance for 2020. Uncertainty over the duration of the crisis will make it difficult for the company to make projections, but results and commentary around the second half of March -- when U.S. shutdown orders took effect -- will give a picture of the overall impact to Lyft's business.
2. Strategic Moves
Lyft has told investors it's taking a number of actions to mitigate the impact of the pandemic and to "strengthen its financial position, improve its cost structure, and support drivers and riders on the Lyft platform," according to a press release. On Wednesday, investors can expect a detailed update on what those actions are, and what the implications are for Lyft's balance sheet. Layoffs are likely a big part of the equation: The company laid off 982 employees, equivalent to 17% of its workforce, according to an SEC filing last week.
3. Profitability Timeline
Prior to the pandemic, Lyft was targeting the end of 2021 to turn a profit but now that timeline seems to have been thrown into disarray. Both Lyft and its larger rival, Uber, were already walking a fine line between increasing capital efficiency and growing top-line results. Given uncertainty in the near term, Lyft may not announce a revision to their profitability target on Wednesday -- but in the weeks and months ahead, investors will have a chance to suss out the pandemic's impact on Lyft's profitability prospects, with both Uber and Lyft under pressure to deliver profits sooner rather than later.