Lyft and Uber are losing money — and face an uphill road to profitability (via BrettArends)
The tepid reaction to both Lyft and Ubers IPOs show they likely need people to take more rideshares, and at higher prices if they have the hope of becoming profitable.
At the moment, both companies are losing money. Your rides are effectively being underwritten by venture capitalists who have financed the companies. Uber has collected a total of $13.6 billion in private investment, according to FactSet. Lyft attracted approximately $5.2 billion in private investment prior to its IPO.
Will ride-sharing still be a cheap, and attractive, alternative to owning your own car when these organizations have to turn a profit? Lyft LYFT, -7.41% is currently trading below its IPO price of $72 per share. It reported a first-quarter loss $1.14 billion or $48.53 a share, or a loss of $211.5 million, or $9.02 a share after adjusting for stock-based compensation — typically an especially large expense in the quarter after an IPO.
Long-term investors may question whether that is sustainable in a competitive market. Anyone standing on a street corner trying to hail a ride on their smartphone can compare the prices of Uber and Lyft in a moment. .Of course, the more people who use ride shares, the more likely these companies will benefit from economies of scale, and be able to keep their prices down.
The upside: The scale of the economic opportunity for these two companies is dramatic, studies show. Owning and driving our own cars is extremely costly and inefficient, in time, effort and money, studies show.
Are these economics sustainable? How long will low prices last? That begs the question: Will ride-sharing still be a cheap, and attractive, alternative to owning your own car when these companies have to turn a profit?
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Uber, Lyft drivers plan to strike ahead of Uber’s IPODrivers are calling for better job security, a livable income and a cap on the ride-hailing companies’ commission.
Read more »
Uber and Lyft drivers are planning to strike this week, and it highlights the challenge the 2 ride-hailing giants face as public companiesUber and Lyft are still fighting tooth and nail for market share in the United States.
Read more »
Uber and Lyft drivers are striking in over a dozen cities around the world on Wednesday. Here's the full list of where demonstrations are planned.Demonstrations by Lyft and Uber drivers are planned in at least 20 cities around the world.
Read more »
Strike by Uber and Lyft drivers Wednesday has potential to disrupt travel for thousandsThe work stoppage could mean longer waits for service and surge pricing — if you can hail a ride at all.
Read more »
Uber, Lyft drivers plan to strike in more than a dozen major citiesRide-hailing drivers in more than a dozen cities plan to strike on Wednesday ahead of Uber's highly anticipated Wall Street debut.
Read more »
Breakingviews - Lyft takes some gas out of Uber’s IPOOn Breakingviews – Lyft is likely to take some gas out of Uber’s IPO by tombuerkle
Read more »
Uber and Lyft drivers plan to strike to protest low wages, job insecurity'Uber's corporate owners are set to make billions, all while drivers are left in poverty and go bankrupt,” one strike organizer said.
Read more »
Uber, Lyft drivers on global strike just before Uber's IPOUber and Lyft drivers on global strike to improve wages and working conditions just two days ahead of Uber's monster IPO.
Read more »