Lyft plans a monthly membership that will give customers a 15% discount on rides, free bike and scooter rentals, and priority airport pickups.
The ride-hailing company on Tuesday said the new membership, called Lyft Pink, will debut nationwide later this year. Subscriptions will cost $19.99 per month.
To break even, a customer would have to spend $134 on rides per month. That translates into around two to three rides weekly, depending on their cost.
The membership could help Lyft narrow its huge losses as it tries to reassure investors that it will eventually become profitable. During its second-quarter earnings call with analysts, Lyft said that it expected its losses to peak this year before starting to shrink next year.
Last week, Lyft said it expects to be “profitable” excluding certain expenses by the fourth quarter of 2021. But some analysts remained skeptical about the prediction and its significance.
“Bears will not be fully swayed yet,” Justin Patterson, analyst at Raymond James, wrote in a note published last week. “4Q21 is still a long time from now, and bears will remain skeptical about unit economics and capital needs.”
Lyft’s shares are down 38% since its initial public offering in March.
Pink would provide Lyft with recurring revenue to helps offset some of its seasonal dips in rides. The membership also may help increase the number of rides customers take and make them less likely to use rival Uber, which offers a more costly monthly membership.
Uber’s membership, being tested in Chicago and San Francisco earlier this year for or $24.99 per month, provides discounts on rides, free deliver on Uber Eats, and free scooter and bike rides.
This isn’t the first time Lyft has rolled out a membership plan. A year ago, the company introduced its All-Access Plan, which cost $299 monthly and gave customers 30 rides worth up to $15 each. That plan will be discontinued on Oct. 30.
Lyft may provide more details about its expectations for the new membership during its third quarter earnings on Wednesday.