Rideshare company Lyft, despite recently announcing steps to make itself more competitive in the market, has been met with skepticism by investors after the company's fourth-quarter results  show that it's falling behind its main rival, Uber, according to The Wall Street Journal.

Lyft's shares dropped by 30% during Feb. 9 after-hours trading. Unlike Uber, which has diversified and globalized its business, Lyft has been focusing on a single lane, which helped it achieve adjusted profits before Uber did. Now, though, Lyft is beginning to slow down.

Lyft has been struggling to recover from the COVID-19 pandemic, with the number of active riders down by 11% in the fourth quarter compared to pre-pandemic levels. The recovery has been slow, with the number of riders remaining flat every quarter. Lyft has kept its prices elevated through frequent surge pricing and base rates, which have temporarily boosted its revenue. However, this has also caused a decline in ridership as the company competes with Uber, which recently celebrated its best quarter ever regarding monthly active platform users.

Lyft has been struggling to recover from the COVID-19 pandemic. | Raysonho/Wikimedia Commons

Lyft's focus on becoming more competitive during this earnings season suggests that it has been losing market share to Uber, which currently controls approximately three-quarters of the U.S. share. Although Lyft has been emphasizing the importance of sustainable profits, the company is currently facing problems such as rising insurance premiums, increased spending on technology, and a possible recession. 

To remain competitive, Lyft may have to lower prices and risk hurting its revenue. In addition, as a company mainly based in the U.S., Lyft is also struggling with increased spending on insurance reserves and other liabilities, which has caused a loss on the basis of earnings prior to interest, taxes, depreciation and amortization.