Stock Market Analysis

Can Rideshare Companies Survive The COVID-19 Pandemic?

Less people are using transport as we are told to stay inside because of the coronavirus outbreak, and it’s having a huge effect on rideshare businesses. 

Cabin fever is surely setting in for many of us who are confined to our homes as the world grapples with the coronavirus pandemic. With a number of restaurants, bars and workplaces closed across the globe, less of us are using transport and particularly ride-sharing apps. 

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How Much Are Ride-Sharing Companies Affected?

The two big names when it comes to needing a quick ride are Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT). Both companies are suffering big time, with their revenue slowing by over 50%. Their stock prices have also taken a big hit, With Uber plummeting by around 64% between February and March this year and Lyft falling by 70% in the same time.

Uber and Lyft have very similar business models and launched a number of guidelines to help their workers during the virus outbreak. These include providing free cleaning disinfectants, and Uber has vouched to pay two weeks worth of paid sick leave for drivers. This response still has many employees worried as they have no security beyond this, much like other freelance workers in the current climate.

What Does The Future Look Like For Ridesharing?

Despite the difficult times ahead, both ride-hailing companies do have a good amount of cash in hand. Uber’s CEO Dara Khosrowshani has told analysts that the company has $10 billion of unrestricted cash. Lyft raised $2.5 billion in March last year when shares rose to $72 each. Also, Lyft has no debt which means it is in a pretty strong financial position. 

However, there is only so long both businesses are able to rely on their cash before it runs dry. It’s likely both Uber and Lyft will have to become more open to providing other services that are in high demand, like delivering groceries to the vulnerable. Uber has already started adapting as it launched a new Work Hub to help its drivers find other types of work such as logistics and customer service.  

Is Autonomous Ride-Sharing The Answer?

It would make sense to have a self-driving vehicle getting us from point to point as the viral outbreak affects the globe and we practice social distancing. Alphabet’s (NASDAQ: GOOG) self-driving company, Waymo, halted its services in Phoenix and Detroit because of the pandemic. This is because most of its vehicles still need a real driver to avoid any potential crashes.

Other big names are also being forced to adapt as people look to purchase new vehicles. For instance Tesla (NASDAQ: TSLA) started allowing contractless test drives. It’s hoped the market for greener vehicles will also pick up by the end of April, as many countries begin to recover from the pandemic and lift restrictions. 

Is It A Good Time To Invest In Ride-Sharing Companies?

Share prices for both Uber and Lyft have fallen significantly due to the virus outbreak, so it would be a good idea not to wait too long to add them to your portfolio. Once the pandemic has run its course and businesses start to reopen, the ride-sharing companies will be in hot demand once again.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.

Alsha Coppolina
Alsha Coppolina
Alsha is a contributing writer to MyWallSt. Alsha’s favorite stock is Shopify because not only does she enjoy a bit of online shopping, but she believes the e-commerce solutions business is going to continue making big gains.