Rideshare giant Lyft filed its IPO prospectus on Friday. The company’s net losses and heavy reliance on autonomous vehicles is likely the biggest concern for investors, said Brian Allan, senior director of strategic partnerships at HyreCar.
Lyft’s net loss climbed to $911.3 million in 2018 from $688.3 million a year earlier, according to the filing. Lyft hit $2.2 billion in revenue in 2018, which is double the previous year.
“Based on Lyft’s published losses, the company is not sustainable in a world where it still has to have drivers,” Allan said. Therefore, Lyft is looking to driverless cars. “Autonomous vehicles are 15 to 20 years out — that’s a lot of cash burned until autonomous happens,” Allan said, noting that removing the driver would allow the rideshare company enough capital to offset its losses, but that has not come to fruition. “However, I remain bullish for Lyft because I believe they will double their ridership by 2023 and enjoy economies of scale to become profitable,” he added. “And then it’s off to the races.”
To provide autonomous vehicles, Lyft partners with Aptiv. The companies have facilitated more than 35,000 rides in Aptiv autonomous vehicles with a safety driver since January 2018, the filing notes. However, the ride-hailing company predicted that a greater market acceptance of autonomous vehicles would happen sooner, Allan said. As a result, Lyft’s concern with autonomous is in the filing.
The company called the success of autonomous vehicles “out of our control,” listing market acceptance as a top concern. The company wrote:
“The autonomous vehicle industry may not continue to develop, or autonomous vehicles may not be adopted by the market, which could adversely affect our prospects, business, financial condition and results of operations.”
Over the next year, it will be interesting to see how investors react to Lyft’s losses, said Grayson Brulte, president of consulting firm Brulte & Co. “How long will investors take [Lyft] losing millions of dollars?”
For the near term, as dealers increasingly sell cars to consumers looking to participate as rideshare drivers, “lenders will be financing cars whether they are privately owned or fleet-owned,” Allan said. To that end, lenders should aim for shorter loans that enable rideshare drivers to trade cars more frequently, considering that they’re racking up 2,000 to 2,500 miles a month on their vehicles, he said.
Lyft did not respond to request for comment.
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