The ride was rougher than that for Lyft shareholders. The stock dropped to as low as $16 per share in mid-March before rebounding strongly as fear subsided a bit.
Demand for ridesharing began to fall off a cliff in March due to the COVID-19 pandemic. Commuters stopped commuting via ride-hailing, and more people were staying home overall.
Rideshare rides fell 75% year over year in April, and bottomed out during the second week of April. From there, rideshare rides increased each week for seven consecutive weeks. May rideshare rides grew 26% compared to April levels, but were still down 70% year over year.
In the last week of May, ride-hailing rides had improved to being down only 66% year over year. Clearly, things have picked up from the April low, but are still dreadful for Lyft.
The company has had to lay off 17% of its workforce and furlough another 300 employees. It implemented a three-month pay reduction for all salaried employees, including 10% for most non-hourly employees and up to 30% for executives. It's eliminating $300 million of annual run-rate fixed costs by the end of this year. And Lyft is reallocating some employees to work on projects that will improve the company's ridesharing unit economics.
Lyft is going through a rough time, but ridesharing demand should recover in time. When it does, Lyft should reach overall profitability at a lower level of ride-hailing because of the fixed costs it's eliminating this year and the initiatives around improving unit economics.
Investors shouldn't expect a rapid rebound in demand for Lyft's service anytime soon, but it appears well-capitalized enough to see the eventual recovery.