As ride-hailing company, Lyft (yes, the other Uber), begins the journey to the public bourse, we are now seeing its financials: they do not look extremely party-like. The company lost nearly $1 billion last year even as it racked up $2.2 billion, about twice the revenue number for 2017. And the big one – the ARPR (average revenue per ride) is $3.56. Simply, I do not see how these business models can work in Africa where the profit gestation period is expected to be short; otherwise, the investors will give up. Lyft, from its prospectus, is even telling investors that it may not make money in the next 11 years!
So Lyft is speedy. But like its archrival Uber—which has disclosed performance data publicly ahead of its IPO filing—Lyft’s results are atrocious by any objective standards. Yes, it has proven it can grow. It racked up $2.2 billion in revenue last year, about double the year before. But Lyft lost nearly a billion dollars from operations in 2018. Its cash balance declined by $600 million. And while the number of rides it provides continues to tick up, its average revenue per ride is tiny: $3.56 in 2018.
Lyft makes a virtue of its focus. It only provides transportation, primarily through rides in cars but also through bikes and scooters. Revenue from the latter category wasn’t material last year, however. Lyft’s simpler business model will get chewed over by investors as they compare it to Uber’s. The rap on Uber is that the growth in its core business is anemic, while its hoped-for bright spots are its prepared-food delivery and freight forwarding businesses. Lyft has neither of these product lines.
In case any of this was a little confusing, let me break it down for you: Lyft is telling prospective investors it might not make money for 11 more years. (Fortune Newsletter)
Because of these loss-happy business models, I return to my old prediction that Uber and Lyft will merge in coming years. Yes, they will just give up after all these losses and decide to start generating income. Because the industry is so young and fragile, regulators will not mind: similar rivalries have ended together:: Elance/Odesk (now UpWork), Groupon / LivingSocial, Sirius / XM and Rover / DogVacay.