Lyft Partners with Payfare for Driver Incentives – Report
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Lyft Partners with Payfare for Driver Incentives – Report

The unwarranted Russia-Ukraine war has sent oil prices into an upward spiral, affecting all commodities and raising the pricing burden on consumers. One sector which has seen the worst impact from rising fuel prices is ride-hailing services.

Rideshare platform Lyft, Inc. (LYFT) saw its stock plummet almost 43% over the past year, and has lost more than 17% year-to-date.

Yesterday, Lyft’s price dropped 4.6% on the news that RBC Capital analyst Brad Erickson had slashed the price targets on two competing ride-hailing companies- Uber Technologies (UBER) and Lyft, due to rising driver supply challenges.

Lyft Eases Driver Fuel Pressures

According to Reuters, Lyft has partnered with fintech company Payfare to ease the pressure of rising fuel prices on drivers, and expects to retain and attract drivers through this move.

Drivers with Lyft Direct cards will get cashback rewards of 4% to 5% on gasoline purchases until June 30. This will enable drivers to save up to 21 cents per gallon on average.

According to the American Automobile Association, driven by the ongoing war, fuel prices have surged more than 20% over the past month. Drivers are shying away from ridesharing service platforms since rising fuel prices leave little room for savings.

However, after the restrictions of the COVID-19 pandemic eased, people are venturing out more, leading to an increased demand for ride-hailing services.

Service providers are employing different initiatives to keep current drivers and attract new ones to counter driver supply shortages, which in turn is raising costs for the companies and drastically reducing their margins.

Analysts’ Take

Analyst Erickson cut the price target on the LYFT stock to $50 (35.7% upside potential) from $53 but maintained a Buy rating.

According to Erickson, increased investments in attracting drivers will lead to enhanced expenditures for Lyft.

Other analysts on the Street also echo a cautiously optimistic outlook on LYFT, with a Moderate Buy consensus rating based on 17 Buys and nine Holds. The average Lyft stock prediction of $56.67 implies 53.8% upside potential to current levels.

Website Traffic

TipRanks’ Website Traffic tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into LYFT’s performance.

In February, Lyft’s website traffic recorded a 1.77% year-over-year decrease in monthly visits. Similarly, year-to-date website traffic growth decreased by 3.25% compared to the same period last year.

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