Amid a spike in coronavirus cases in the United States, Lyft, Inc. LYFT, which was seeing gradual improvement in ride volumes from the dramatic lows in April, has witnessed an “impact on demand”. Consequently, rideshare rides were down approximately 50% year over year in November, according to a SEC filing dated Dec 2. This is worse than the 47.4% year-over-year decline in October ride volumes. Lyft’s operations are significantly hurt by coronavirus-led rides weakness as evidenced by the 30.9% year-over-year decline in total revenues in the first nine months of 2020.
The SEC filing reveals that the company now expects revenues to rise at the lower end of its previously guided range of 11-15%, sequentially in the fourth quarter of 2020, thanks to reintroduction of coronavirus-led restrictions in some of the cities.
However, on a positive note, Lyft anticipates adjusted EBITDA loss to narrow in the ongoing quarter compared with its previous expectation. It now estimates the same to be better than $185 million in the fourth quarter, against the previous forecast for an adjusted EBITDA loss of roughly $200 million at the midpoint and $190 million at the high end. The improved view is due to expectations of increase in Contribution Margin, as well as significant cost control measures. Contribution Margin is now predicted to increase at top end of the previously guided range of 170-270 basis points, in the fourth quarter from the third. Lyft expects Contribution Margin to further increase in 2021 sequentially from fourth-quarter 2020, even before a full recovery.
*By Zacks Equity Research, Nasdaq.com*