Following over a year of social distancing and public health regulations, popular ride-sharing platforms are rebounding from stagnantly low levels of demand. Among these is the corporation Lyft, whose stock has seen significant gains in just the past few weeks. With a transforming social climate and the widespread easing of restrictions, this unprecedented growth appears to be a trend to continue indefinitely.
The Popularity of Pay-to-Ride
The widely popular platform Lyft is among several ride-sharing services that have swept app stores with millions of downloads in the past decade. First released in 2012, the service that once started as a long-distance carpooling program now pairs contracted drivers with individuals and organizations in need of on-demand rides, a convenience that has largely compensated in areas that lack public transportation or taxi services.
With a handful of vehicles and price points to accommodate over 12.5 million riders, Lyft’s unhindered growth is not surprising. Between bikes and scooters, as well as budget-friendly, private, roomy, top-driven, eco-friendly, rental, and premium rides, the San Francisco company’s business model has adapted to 644 cities in the United States and 12 cities in Canada. With approximately 30% market share, Lyft is the second largest ride-sharing company in the United States after its direct competitor Uber.
Stock Leaps
As a result of the rapid spread of the coronavirus in the spring of 2020, the American stock market saw an unprecedented crash for a relatively short period. With the increasing panic of the novel virus, investors feared for the potential impact of the pandemic on national markets. As businesses and industries closed their doors and halted operations on a massive scale, mandated shutdowns were expected to permanently damage many sectors of the economy. High unemployment rates, and therefore, decreased purchasing power pressed stakeholders to pull from once-profitable investments.
Of course, with mass vaccination efforts across the United States, certain aspects of what one might consider “normal” life have returned. This includes in-person obligations like work, school, and some types of social commitments, whether they require a ride to the office, campus, or restaurant.
Types of publicly accessible transportation, such as ride-sharing services like Lyft, have been considered essential for the duration of the pandemic. Even with the masses staying at home, these platforms have continued to operate under enhanced social distancing and cleaning guidelines. With COVID-19 posing a decreasing threat to the vaccinated population, it makes sense for investors to pour funds back into this kind of essential service.
Lyft executives are only echoing these sentiments, reaffirming that ride-hailing has officially returned. In its first fiscal quarter, the company has attested to 13.49 million active riders utilizing ride-sharing services, which is a whopping 940,000 more customers than the previous quarter. These figures point to much more than a mere resurgence of these kinds of applications, but the growth to new heights.
On Tuesday, May 4th, 2021, the company’s shares climbed as high as 7% after hours, after falling 1.5% in the regular session. By Wednesday, LYFT was up about 5%. Though the first quarter ended with March and the company saw a certain drop of rides in April, ride metrics have continued going up 100% year after year.
Lyft Chief Executive Logan Green believes the “warmer weather and easing of restrictions” has led to more people moving, and therefore, requiring the transportation to follow suit. In all, elevated demand across networks has resulted in significant and meaningful growth after over a year of many different kinds of losses.
Why Is Lyft So Attractive to Investors?
With economic recovery underway, the value of Lyft is continually on the rise–so much so that CFO Brian Roberts expects a growth inflation beginning in the second quarter that will strengthen in the second half of 2021. Naturally, the regular commuter’s dependence on ride-sharing services will keep demand high, especially with the easing of social distancing restrictions.
In addition to this practical catalyst for growth, the ride-share giant faced major changes following the passing of Proposition 22 in California markets. Prior to its enactment following the November election, existing labor laws sparked an ongoing backlash in the state’s large freelancer population. It wasn’t until Election Day 2020 that California voters rolled back these regulations by showing unwavering support for the proposition, thus providing wage protections and other vital benefits for app-based drivers while maintaining their independent contractor status. After its enactment, Lyft and Uber stock skyrocketed, considering the large revenue streams pouring in from California riders and services.
Considering the ongoing societal transformations and company developments made in just the last year, Lyft stock is a clear indicator of the anticipated growth of the company well into the future.
The Man Behind It All: Logan Green
Logan D. Green, co-founder and CEO of Lyft, once grew the existing corporation from the ride-share start-up Zimride out of San Francisco. Since 2017, Lyft services have provided over a million rides every day, with the platform being available in all fifty states and in Toronto, Canada.
This kind of market demand, innovation, and growth is largely unique to ride-sharing companies like Uber and Lyft, but Green’s company has paved a significant difference in earning its level of success: creating a culture around social interaction. While these kinds of services help American consumers to save some of the $2 trillion they spend on cars every year, the social culture Green has helped to cultivate around carpooling has made all the difference in Lyft’s profitability.
Of course, this is all reinforced by Lyft’s gains in market shares, with the biggest gains residing in San Francisco. While quick and efficient service is a prerequisite to significant company growth, Green finds it more effective to compete with company values in the areas that Lyft is currently taking precedence over its counterparts.
Though comparable to its competitor Uber, Lyft has experienced a kind of consistent growth that can be attributed to its distinct company culture. Under bold leadership and brightening market conditions, this ride-sharing company can expect to see this kind of development well into the future.
How Does Lyft Work?
Perhaps what warrants the ride-sharing company its mass patronage is its accessibility. Since the service is typically accessed via mobile device, users are able to quickly and conveniently set up their own profiles with minimal effort. This registration through the application, which includes adding contact information and preferences, also involves the setup of a variety of payment methods: from credit card to e-commerce payment systems (i.e. PayPal) to the occasional cash transaction.
With setup complete, it only takes a mere thirty seconds to request a ride on the fly. By entering one’s current location and drop-off destination, the platform efficiently pairs patrons with available drivers nearby whose vehicles fit the stated preferences for the ride. All that’s left for riders to do is wait for their driver’s arrival, hop in, and offer a rating (and optional gratuity) after. It’s as easy as it sounds.
Even the hiring system of independent, contracted drivers is proficiently streamlined. Once drivers meet the age, health, and vehicle requirements mandated by Lyft, they must provide their vehicle, license, and mobile device in order to get started. Generally speaking, Lyft has a tighter hold on the level of safety and skill of their drivers and their vehicles, making riding with the company all the more attractive to prospective customers.