Regardless of profitability, startups can command high valuations when they go public. Even when operating firmly in the red with nary any black ink in sight.
And so it goes with Lyft, the ridesharing company based in San Francisco. Upon hitting the NASDAQ exchange in late March, it rocketed to an IPO price of $72/share. But consumer confidence lagged and it lost more than 20% of its value in the last month. Put into perspective, that’s almost $13 per share drop, and a $3 billion loss of market cap down to $17 billion from $20 billion.
Lyft Operating With Big Losses
With its first quarterly earnings report since going public, Lyft has some positive news. Revenue has almost doubled from this quarter last year to $776 million with an adjusted loss of $9.02 per share. I suppose a $9.02 loss is better than the estimated $11.40 per share from the same time period a year ago.
Still, anyway you spin it, Lyft isn’t anywhere near profitability. To calm investors and analysts nerves, Lyft’s Chief Financial Officer Brian Roberts reported 2019 will be the peak of the money bleed and the financial boat will steady. He expects second quarter revenue between $800 million and $810 million.
Waymo To The Rescue?
In addition, Lyft reported an almost 50% increase in active ridership from 14 million in the first quarter of 2018 to 20.5 million this quarter. Revenue per rider also went up from $37.86 compared to $28.27.
All of this numbers-tap-dancing is just putting lipstick on a pig. Big losses are big losses. However, Lyft just announced in a Medium post on Tuesday, a new partnership with Waymo, the self-driving car company owned by Google’s parent, Alphabet. This could significantly and positively affect Lyft’s bottom line, because a good portion of revenue goes to Lyft drivers. With self-driving cars, that expense is cut out of the equation. The plan is for Lyft to make 10 of Waymo’s vehicles available through its app in the Phoenix area, where Waymo already has a test program up and running.
In order for Lyft, Uber or any other ride sharing company to become profitable, analysts have said automation must be a part of the model. Lyft is apparently on the same page, developing its own self-driving cars. Let’s see what the numbers look like a year from now.