Few stocks have been hit as hard by the coronavirus pandemic as Lyft (NASDAQ:LYFT).

The No.2 ridesharing company in the U.S. saw revenue fall 61% in the second quarter and posted an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) loss of $280 million. As rival Uber (NYSE:UBER) has also experienced, demand for ridesharing has plunged during the pandemic. Most people who can work from home are doing so, and people are avoiding airline travel and social events, key drivers of ridesharing demand.

Lyft's guidance for the third quarter indicates that it expects the recovery to be sluggish, calling for an adjusted EBITDA loss of $225 million, which doesn't include an incremental $40 million that the company is planning to spend to fight new legislation in California that would force the company to reclassify its drivers as employees. It also said that rides were down 54% in July, marking an improvement from the second quarter, but still a sharp decline from pre-COVID levels.

Still, on the earnings call, the company made the argument that it would emerge as a post-pandemic winner. Making the pitch, CFO Brian Roberts drew a sharp contrast with Uber, saying:

Also as we look forward, our focus positions us well for the rebound. We expect we will have strong organic year-over-year revenue growth in 2021, given our sole transportation focus. No portion of Lyft's business enjoyed favorable tailwinds from COVID. So, Lyft is well positioned as a pure-play in the expected recovery. In terms of our geographic focus, we operate solely in the US and Canada, and the US government is directing nearly $10 billion aimed at gaining priority access to and volumes of select COVID vaccines and therapeutics.

Lyft stock is down by a third this year and 60% since its IPO last year. Unlike most travel stocks, the company was growing quickly before the pandemic, as revenue jumped 68% in 2019 and 52% in the fourth quarter. Assuming the economy normalizes and Lyft can return to its prior growth trajectory, the stock is intriguing as a recovery play. Here's what else management had to say about that.

Two women chatting in the front of a Lyft car.

Image source: Lyft.

Profitability is still in sight

Last year, management set a target of becoming profitable on an adjusted EBITDA basis by the fourth quarter of 2021. Despite the challenges from the pandemic, management is sticking with that goal, saying that after layoffs and other cost cuts totaling $300 million in annual cost savings, the company can be profitable with 20% to 25% fewer rides than it originally projected. It's not clear exactly how many rides that is, but based on the company's original 2020 guidance, it had originally planned to break even on EBITDA with $5.5 billion to $6 billion in annual revenue. After the cost cuts, it should be able to meet that goal with less than $5 billion in annual revenue. By comparison, in 2019, it generated $3.6 billion on the top line.

Lyft is getting creative

The vast majority of Lyft's revenue comes from its ridesharing operations, and unlike Uber, it doesn't have a business delivering from restaurants. However, the company has made efforts to diversify beyond ride-hailing. Lyft is the country's leader in bikeshare and noted "very strong engagement" in the category as Americans sought out socially distant forms of transportation. Bikeshare usage more than tripled from early April to late June. Lyft also sees e-bikes as a promising growth avenue in bikeshare.

Additionally, the company is getting into the rental car business, allowing users to rent cars directly through the Lyft app. Lyft Rentals is currently available in Los Angeles and the Bay Area, and revenue has recently surpassed pre-COVID levels after the program was introduced late last year. It's also partnered with the rental car company Sixt to increase access to rentals, integrating Sixt's systems into Lyft's own app to make bookings seamless.

Finally, Lyft also introduced Essential Deliveries in April, giving organizations the ability to request delivery of essentials like food and medicine from Lyft drivers. It also gives Lyft drivers the ability to make extra money when rider demand has been down. Co-Founder John Zimmer said: "While it's still early days, we are very pleased with the results so far and continue to grow the program." The move seems to leverage Lyft's platform in the same way that Uber Eats does for Uber with restaurant delivery.

Though nearly all of Lyft's revenue will come from ridesharing for the foreseeable future, the above initiatives show the company's optionality and its ability to expand into developing new transportation businesses.

The winning scenario

There's a heated debate in the market and in the greater world over what everyday life and the economy will look like after the pandemic is over. Some believe that there won't be a return to prior levels of workers commuting to offices, shoppers visiting stores, and business travelers flying on planes. 

However, there's also an alternative scenario where pent-up demand for experiences that have been unavailable during the pandemic explodes. Americans embrace air travel, spend more time going out to restaurants or live events like sports and concerts, and return to the usual work routine, outside of the home. As demand snaps back, there's the possibility that spending on travel and entertainment could be significantly higher than pre-pandemic levels.

That scenario would overwhelmingly favor a company like Lyft, whose business is built on providing transportation for things like getting to the airport, daily commuting to work, and nighttime social and entertainment events. 

Whether that comes to pass remains to be seen. There are a number of unrelated obstacles the company is facing, including the California legislation, the need for a widely available vaccine, and the prospect of a recession affecting consumer discretionary spending. 

However, the company's position as a beaten-down growth stock on track for profitability next year makes it one of the bigger potential winners in the economic reopening. 

Though the reopening isn't as imminent as Lyft bulls would like, the stock could take off once normal life begins to return.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.