04 March, 2019
Ride-hailing giant Lyft is releasing financial details about the company in a federal filing before it begins selling its stock to the public. The ride-hailing business is inherently expensive because companies typically pay incentives to recruit drivers and offer discounts to riders.
In its IPO prospectus registered with the SEC, Lyft said it had 2.2 billion US dollars in revenue in 2018, an increase from 1.1 billion dollars in the previous year. As executives and advisers hit the road to market shares to possible investors in the next few weeks, they're likely to be pitching to a group that's no stranger to money-losing tech listings.
However, losses have widened from $682.8m in 2016 to $688.3m the year after and $911.3m in the last 12 months. In replacement, Lyft is giving out cash bonuses to some drivers with "good standing", which can be (but doesn't have to be) spent on shares. Both Uber and Lyft have started offering bikes and scooters as alternatives to auto rides for short trips, hopeful that a transportation option that does not involve paying drivers will prove more profitable.
At the moment, Lyft is in control of 34 percent of the ride-hailing market in the USA, a number that it has worked very hard to improve over the years. Uber posted revenue $11.3 billion and losses of $1.8 billion previous year.
"We're woke", co-founder John Zimmer declared in a widely mocked interview with Time magazine in 2017.
Both Uber and Lyft are now locked in a two-way battle for achieving market dominance in the ride-hailing segment of the US.
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"Lyft is dwarfed by Uber, but it's clearly growing and edging into Uber's customer base", Kennedy said.
A high valuation for Lyft would bode well for Uber's prospects.
Lyft had 30.7 million riders and 1.9 million drivers in 2018, racking up US$8.1 billion in total bookings, the filing shows.
Lyft warned that it may have trouble achieving and maintaining profitability as it is now investing in shared bikes, scooters and financial support for drivers. Its 2016 bookings were $1.9 billion.
"The growth rate in Revenue per Active Rider increased significantly in the first and second quarters of 2017 as our brand and values continued to resonate with riders and they increased their usage of Lyft instead of competing offerings."
It also sets a precedent for rival Uber, which is also expected to go public this year. The company is expected to go public this year as well with a reported market capitalization of up to $120 billion. Uber and Lyft have been subject to similar attacks on their business model, which classifies drivers as contractors and not employees.