By Nivedita Balu

(Reuters) – Lyft Inc (NASDAQ:) on Thursday forecast current-quarter revenue far beneath Wall Road targets because the ride-hailing service lowered costs, triggering a 30% drop in shares on considerations it was falling behind greater rival Uber (NYSE:).

Lyft additionally forecast income beneath analyst expectations for the present quarter.

Traders are watching how the 2 firms rebound from the worldwide pandemic and whether or not they can develop income, which is commonly seen as a matter of pricing energy.

President John Zimmer mentioned in an interview with Reuters that the corporate deliberate “decrease costs” and fewer hours of peak pricing, which he referred to as “much less prime time.” Lyft had room to decrease costs as a result of the market was robust, he added.

“Given the wholesome market, which hasn’t been the case coming off of the pandemic, it is essential for us to reap the benefits of that chance,” he mentioned.

The plunge in Lyft’s share value translated into a virtually $2 billion loss in market cap; its shares had been probably the most traded on the Nasdaq in after-hours commerce. Uber shares had been down 2.5%, a day after Uber reported a shock fourth-quarter revenue and forecast a current-quarter revenue effectively above the typical analyst estimate.

“They’re clearly struggling right here” in comparison with Uber, mentioned Tejas Dessai, an analyst at World X ETFs. “They should consider their operations.”

Lyft forecast first-quarter income of about $975 million, beneath analyst estimates of $1.09 billion, in line with Refinitiv information.

Lyft forecast first-quarter adjusted earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA), a key measure of profitability that strips out some prices, of between $5 million and $15 million. The typical analyst goal was $81.1 million.

Chief Monetary Officer Elaine Paul blamed the forecast on seasonality and decrease costs, together with fewer Prime Time hours. Adjustments in insurance coverage renewal timing additionally pressured income.

“The steerage was a catastrophe and Lyft continues to be the little brother of Uber,” Wedbush analyst Dan Ives mentioned.

Lyft’s greater presence on the U.S. West Coast, a area that analysts have mentioned is trailing the remainder of the US in its return to pre-COVID demand and the place rideshare drivers are briefly provide, may very well be hurting its restoration in contrast with Uber.

Zimmer mentioned the West Coast had “not totally” recovered, however he famous a “materials enchancment.”

For the fourth quarter, Lyft reported adjusted EBITDA of $126.7 million, excluding $375 million it had put aside for rising insurance coverage reserves. Analysts had forecast $91.01 million.

“We needed to make sure we strengthened our insurance coverage reserve. … The aim of doing that’s to make sure we do not have that sort of volatility going ahead,” Zimmer mentioned in an interview.

Energetic riders rose 8.7% to twenty.36 million for the fourth quarter, Lyft mentioned, above the FactSet estimate of 20.30 million.