Despite the increasing popularity of ridesharing companies like Lyft and Uber and their sky high valuations, some investors are wary of these companies as being potential dot com busts. In recently leaked private fundraising documents obtained by Bloomberg, Lyft lost $127 million USD between January-June 2015 on $46.7 million in revenue.
Being the second-largest ridesharing company in the United States (behind Uber) is not a great place to be, it seems. In the first half of the year, Lyft generated less revenue, lost more money, and added fewer customers than projected. One of the major challenges has been the high expenses on marketing: in 6 months, Lyft managed to spend $96.1 million on marketing campaigns, which is more than double Lyft’s net revenue during the same time period! Much of these expenses go towards attracting new drivers and riders through discounts and sign up bonuses.
What are your thoughts on the financial viability of Lyft in the future?