Lyft in their investor tour has apparently told potential investors that they will be lowering their spending in the future, saying 2019 will be peak spending.
Losing $1 Billion on $2 Billion in RevenueBloomberg has reported that Lyft has been answering a wide range of questions from investors about how the business will operate in the future. The central focus has been how Lyft intends to compete while lowering their spending. With Lyft having their IPO as early as the end of the month, their finances have become more scrutinized by investors. The company is targeting a valuation of $20 billion, offering roughly 10% of that in their IPO. The problem with this valuation is that investors can’t seem to agree on whether the company is worth anywhere near that. The limited information that has been released shows revenue of just over $2 billion last year and losses that are just under $1 billion. Bloomberg’s sources indicate that the $2 billion Lyft is asking for “should provide all the capital the business will need to operate”. With that in mind, their plan must be to cut spending quite drastically in relation to revenue if Lyft were to continue to operate as they do their funds would run out in a few years before their long-term plan is realized. A $2 billion influx of cash may seem like a lot; it realistically isn’t when you’re losing $1 billion per year. Other tech companies when trying to mature had similar issues with funding such as Tesla (NASDAQ:TSLA 264.53 -3.46%) who still is forced to operate on a very tight budget to continue operations; and as such closed their retail stores. As we wrote about earlier in the week Lyft’s entire future is hedged with autonomous driving, and the partnerships they have for developing the technology.
“If we are unable to efficiently develop our own autonomous vehicle technologies or develop partnerships with other companies to offer autonomous vehicle technologies on our platform in a timely manner, our business, financial condition and results of operations could be adversely affected”
2 thoughts on “Lyft to Cut Spending After Going Public”
I like that, “bailout”, because really that is what it is… they need to be bailed out or else operational funds will dry up by summer! Gonna be an interesting next week on into April, to actually see how Lyft is doing 30 days in when Uber goes public! These companies have been mismanaged for YEARS! Neither can make $1 profit since inception, yet we are looking at a mid $20- Billion dollar IPO & another close to $100- Billion~ these two might just be the next AOL & Netscape— time for smaller good rideshare companies to go HUGE in their local markets and run these “SLAVEDRIVERS” outta Dodge! JMHO
“It seems like tech companies are all rushing to complete their IPO’s right now with Lyft, Uber, and Pinterest all vying for investors money”.
The $2 billion saught will only fund Lyft losses for 2 years! Investors beware! At least 11 years before profits are predicted – and contingent on eliminating drivers with perfection of autonomous vehicle technology. No wonder the founders and early investors are desperately seeking a bailout…