Lyft aimed at controlling 33% of US Rideshare Market in 2017

(Harry) #1

Recent developments in Lyft's investor circles, provided by an investor document, have shown that they will present losses of $600 million for 2017.

According to the new source of information provided by investors document that reached Bloomberg's hands Fidelity will join Alphabet in the new investment round. The document also went on to claim that Lyft has boosted its US market share by 61% during 2017 and has reached close to a third of the market. These gains are directly attributed to the failures in Kalanick's handling of Uber affairs which are still being dealt with by his replacement. With all of Uber's problems and Lyfts advancements, Lyft will still maintain losses due to continual injections of capital into growth and app upgrades and will not reach break-even as originally projected.

With that being stated, the document is forecasting a break-even state next year, 2018 and claims that Lyfts earnings will rise to $500 million in 2019 and over $1 billion during 2020. However, Lyft has increased its spending ratio to take advantage of Uber's problems, and the company will most probably only break even towards the end of 2018 and not during 2018.

While originally Lyft intended to present net revenues of $1.5 billion, the amount it retains after paying its driver's which is on losses of $400 million, the document states that the extra spending will generate losses closer to $600 million. Lyft will raise more equity through another private investment round, with Fidelity and Alphabet injecting an estimated $1 billion into the company. This new round might see current investors joining in, such as Alliance Bernstein Holding LLP, KRR & Co., and Janus Capital Management.

Before Uber's mid-year crisis, Lyft only held a small percentage of around 11-15% in the US market. This percentage included all of Uber's services as against Lyfts, where Uber also had various delivery services that Lyft does not. However, when concentrating on the ridesharing market alone, Lyft's percentage reached closer to 20%. Uber's market share calculations started out at in 2017 showing 80% in 2017, but now they show that Uber only controls 70%.

According to Uber's new CEO, Dara Khosrowshahi, Lyft had taken off its gloves and was now spending a lot of resources and cash on gaining ground during Ubers time of crisis. He went on to state that now he intends to concentrate on recovering losses, and trying to reach profitability, which he intends to reach towards 2019, in time for the IPO.

The document presented some interesting figures, such as the $606 million loss in 2016 on its $708 million net revenues. The document also predicts that Lyft will reach a $2.5 billion revenue in 2018, a $3.5 billion for 2019 and $6 billion revenue in 2020. Lyft has confirmed the authenticity of the document but has requested all people related to it be kept anonymous.

In comparison to Lyft, Uber is a global company, and it generated over $3.3 billion in 2017 but provided losses reaching $1.4 billion in the first half of 2017. Uber has to yet release any new financial information, and CEO Dara Khosrowshahi might not release any new information, preferring to keep the private company private, which is one of the privileges of not being public.

At the moment both companies are trying to raise extra capital from private sources, the main difference is that Lyft is trying to raise capital for expansion and growth while Uber is trying to raise capital to survive from going under, and reach the IPO in good shape for a successful IPO in 2019.

Lyft wants to raise another $500 million
Lyft finally Goes Global; Canada is the first market
Lyft's 2018 IPO Position