Lyft Inc’s shares rose 6% before the bell on Tuesday as the ride-hailing firm announced a management change that Wall Street cheered. This move comes after the company struggled to shake off a pandemic slump in its business and ceded market share to its bigger rival, Uber.
Lyft’s Management Change
The ride-hailing company announced that it has hired former Tesla executive, Cal Lankton, as its new Senior Vice President of Engineering. Lankton is expected to take over the role from Lyft’s co-founder and CTO, Chris Lambert. In addition to this, the company also announced that it is promoting Jody Kelman to the position of Chief Experience Officer. Kelman previously served as Vice President of Consumer Product at Facebook.
Wall Street’s Reaction
Lyft’s shares rose 6% before the bell as investors reacted positively to the management change. Analysts believe that the move will help Lyft in its ongoing battle with Uber. Lyft has struggled to compete with Uber, which has a larger market share and has been more successful in expanding its business into other areas such as food delivery and freight.
Lyft’s Struggle During the Pandemic
Like many companies, Lyft has been hit hard by the COVID-19 pandemic. The company’s revenue fell by 48% in the second quarter of 2020 compared to the same period the previous year. In response, the company cut costs by laying off staff and reducing salaries. However, the company has struggled to recover as people continue to work from home and travel less.
Lyft’s Market Share
Lyft has also struggled to keep up with Uber in terms of market share. According to a report by Second Measure, Uber accounted for 71% of the US ride-hailing market in August 2020, while Lyft accounted for just 29%. This is a significant drop from 2018 when Lyft had a 39% market share.
Lyft’s Future Plans
Lyft has been working on diversifying its business to reduce its reliance on ride-hailing. In October 2020, the company announced that it would launch a delivery service for essential items, such as groceries and medication. The company has also been investing in autonomous vehicle technology, although it has lagged behind Uber in this area.
Lyft’s shares rose before the bell on Tuesday as Wall Street reacted positively to the company’s management change. The company has struggled to shake off a pandemic slump in its business and ceded market share to its bigger rival, Uber. The management change is seen as a positive step for Lyft as it tries to compete with Uber in the ride-hailing market. However, Lyft will need to continue to diversify its business and invest in new technologies to remain competitive in the long term.