Lyft and Uber Ready for Possible Ride-Hail Price War
Lyft signaled a possible price war with rival Uber despite announcing its strong earning forecast to Wall Street this week.
The move spooked investors enough to see the ride-hailing company’s shares fall nearly 7% in after hours trading, Reuters reports. Under new CEO David Risher, Lyft has lowered ride fares and embarked on an aggressive cost-cutting drive in a bid to reduce Uber’s growing market lead in the US.
However, his move reduced Lyft’s revenue per active user by 5% to $47.51 in the second quarter. The figure also missed estimates of $48.38, according to Visible Alpha. The potential of a price war also hit Uber’s share price despite its positive results.
Risher reported that rides receiving prime-time charge, or surge pricing, fell 35% sequentially in the second quarter, while the average per-mile fare was 10% lower from a year ago. Lower pricing resulted in a 8.2% jump in the number of active riders on the platform to the highest in nearly three years, as ride-hailing also benefited from a travel rebound and more office commutes.
He added that Lyft is planning to do away with prime-time pricing for a flat charging structure. “[Prime-time pricing] is a bad form of price raising,” Risher said on a post-earnings call. “It’s particularly bad because riders hate it with a fiery passion and, so, we’re really trying to get rid of it.”
— Paul Myles is a seasoned automotive journalist based in Europe. Follow him on Twitter @Paulmyles_ and Threads
