Lyft and Uber Sink Even Lower as Skepticism Rises Among Investors
Lyft and Uber haven’t had the best of life on the markets lately, have they? For starters, each company surprisingly had a disappointing IPO, and they haven’t fully recovered since then.
The new month hasn’t brought good tidings yet, and on September 3rd they both fell to even fresher lows. Recording their lowest market share closing ever didn’t do either company any favors, as investors continue to grow skeptical about them.
A Low of $30.70
A close down of 5.7% was Uber’s fate on the day, translating to a low of $30.70. The previous low was at $32.57, and that too, didn’t come that far back. In fact, it wasn’t even a week between these two lows, with the $32.57 having been recorded on 30th August.
Further complicating matters, the $30.70 that the company closed at on 3rd September wasn’t even its intraday low. This “title” if we may call it that rests with a certain $30.67, a drop in stock value that had never been recorded in the company before.
Lyft is also fighting the same battles as its counterpart is, recording a larger drop in percentage at 7.2%. However, its closing amount of $45.42 was larger than Uber’s, though that’s hardly a silver lining. For the company, this amount is an all-time low, surpassing the previous amount of $48.15 earlier this year in mid-May.
Its intraday low dropped to $45.40, becoming one for the company’s history books as well. What could be going horribly wrong with these two companies? You’d think that being two of the biggest ride-hailing companies in the States would give them a competitive advantage, right?
Unfortunately, they’ve been making huge losses in recent months, and investors are not convinced that they’ll be back to profit-making ways any time soon.
For 2019’s second quarter, Uber reported a $5.24 billion net loss. And as you would expect, a loss translates to zero dividends, and therefore the company’s investors are not getting any returns on their money. While making the announcement, the company was of the opinion that their loss was a direct result of stock-based compensation. What do you think?
Lyft also made a similar announcement, revealing that they’d made a loss of $644.2 million in the same quarter. What’s even more mind-boggling is that the amount is way more than the $178.9 million the company had already lost at a similar time the previous year.
And as they say, misfortunes don’t come singly. Things aren’t looking up for either company as a potential change in law could have them consider their drivers employees rather than contractors.
The California Assembly has already passed the bill, and it’s now down to proceedings at the Senate whether the bill is adopted into law. It sure looks as though it will, given that Governor Gavin Newsom has publicly confirmed that he is in support of the bill.
To try and fight it, the two ride-hailing companies have made a $60 million pledge as a countermeasure to driver reclassification. They can already see the shockwaves coming, don’t you think?
It seems as though they are fighting wars on all fronts, with their leaders trying to ensure that investors still have faith in them. Is this a war they might win? Time will tell.
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