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 $96.1 million on marketing campaigns, which is more than double Lyft’s net revenue during the same time period! Much of these expenses go towards attracting new drivers and riders through discounts and sign up bonuses.
What are your thoughts on the financial viability of Lyft in the future?
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Related: The Environmental Impact of Uber and Lyft – Good or Bad News?
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6 comments
its dead……UBER has a better model…their marketing efforts are so desperate. 50$ off 5 rides? plus LYFT drivers can cancel a route once they accept it and see what it is, and thats happened to me twice. I just deleted the app last week
What are your routes like that have resulted in the cancellations?
Even, when Lyft does 50% off M-F, it’s still the same price or more expensive than Uber. Not shocked that it’s in financial trouble.
I did not know they had this promotion. Was it in every market?
Unsurprising. I feel like Uber offers a better experience through the quality of drivers (read: cars) they accept. Every Lyft I’ve been in has been less than stellar. Not necessarily bad or dirty, but in clear need of some TLC. Uber, however, offers multiple levels of service – if you’re willing to pay, of course – that cater more to my needs than Lyft’s model of monetized hitchhiking.
And let’s not forget that $1,000 promotion earlier this year that turned out to be a huge money-suck.
Now the question is what will Uber’s financials look like…