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According to leaked financial in [1], Lyft is expected to generate $32M of net revenue on about $158M of fare, while losing $50M per month. If everything stays

According to leaked financial in [1], Lyft is expected to generate $32M of net revenue on about $158M of fare, while losing $50M per month. If everything stays the same, Lyft would have to raise rate by 156% to break even. Also, Lyft's growth is mostly purchased: > While rides increased about 11 percent from April to May, fully paid rides, without the use of a coupon or a credit, grew by only 5 percent in that period. They recently launched in 50+ cities simultaneously, which means they will bleed cash faster in hope of generating some growth number. In comparison, according to [2], in Q3 of 2016, Uber collected 5.5B of fare, and after paying drivers, had a net revenue of 1.7B (30%) and a loss of 800M. If everything stays the same, Uber could break even by raising rate by 47%. If you consider that most of the loss is from developing markets, it's actually not that hard for Uber to break even in the U.S. [1] https://mattermark.com/lyft-financials/ https://mattermark.com/lyft-financials/ [2] https://www.bloomberg.com/news/articles/2016-12-20/uber-s-loss-exceeds-800-million-in-third-quarter-on-1-7-billion-in-net-revenue https://www.bloomberg.com/news/articles/2016-12-20/uber-s-lo... Edits: grammar

rtpg 10y ago
Uber was in a similar situation to Lyft not too long ago. Uber's also already said that they're cash-positive in the US, and Lyft is focused on the US for now. It's not hard to imagine that after this multi-city expansion, costs will go way down. I wouldn't qualify the growth as "mostly purchased" when it's... 50/50 couponed/full? That seems to be more a consequence of the multi-city launch than anything. I'm pretty optimistic of Lyft's chances here (politically motivated by Uber's attitude, granted). They're spending a lot of money to capture parts of a well-defined market (US carsharing), and have a PR edge with informed riders. Uber could theoretically start couponing to hell and back in the US again, but they're going to run out of money someday.
- acchow 10y ago
  > I wouldn't qualify the growth as "mostly purchased" when it's... 50/50 couponed/full If most of their customers are buying only because they are selling under the market price, then it doesn't matter if the subsidy is 5% or 50% or 100%; their sales are "mostly purchased". Imagine you open a store tomorrow and sell gold for 1% under the market price - suddenly your sales blow up to $1 billion in a day. You have purchased all of your sales, with just a 1% coupon.
  - disiplus 10y ago
    thats the price of acquiring a customer. for my saas the cost to acquire a customer is X, X is multiple of montly fees. so only after couple of months im going to be on 0. The cost for me could be adwords, running a free plan, or something else. how is this different. I assume that they hope to convert some of those to regular customers.
    - aedron 10y ago
      "We'll sell at a loss but we'll make it up in volume."
      - vacri 10y ago
        Selling at 1% under market price is only a loss if you're acquiring from the same market.
    - mcherm 10y ago
      The difference between an acquisition cost per customer but making money on each transaction and losing money on each transaction is that the first can be a viable business if you can retain customers long enough while the second will always lose money. Offering below-cost deals to all customers for a time (to acquire them) then raising prices to a profitable level is different from either. Unlike the second, it might make money in the long run. Unlike the first, the ability to make a profit hasn't been demonstrated yet.

rtpg 10y ago

Uber was in a similar situation to Lyft not too long ago. Uber's also already said that they're cash-positive in the US, and Lyft is focused on the US for now. It's not hard to imagine that after this multi-city expansion, costs will go way down. I wouldn't qualify the growth as "mostly purchased" when it's... 50/50 couponed/full? That seems to be more a consequence of the multi-city launch than anything. I'm pretty optimistic of Lyft's chances here (politically motivated by Uber's attitude, granted). They're spending a lot of money to capture parts of a well-defined market (US carsharing), and have a PR edge with informed riders. Uber could theoretically start couponing to hell and back in the US again, but they're going to run out of money someday.

acchow 10y ago
> I wouldn't qualify the growth as "mostly purchased" when it's... 50/50 couponed/full If most of their customers are buying only because they are selling under the market price, then it doesn't matter if the subsidy is 5% or 50% or 100%; their sales are "mostly purchased". Imagine you open a store tomorrow and sell gold for 1% under the market price - suddenly your sales blow up to $1 billion in a day. You have purchased all of your sales, with just a 1% coupon.
- disiplus 10y ago
  thats the price of acquiring a customer. for my saas the cost to acquire a customer is X, X is multiple of montly fees. so only after couple of months im going to be on 0. The cost for me could be adwords, running a free plan, or something else. how is this different. I assume that they hope to convert some of those to regular customers.
  - aedron 10y ago
    "We'll sell at a loss but we'll make it up in volume."
    - vacri 10y ago
      Selling at 1% under market price is only a loss if you're acquiring from the same market.
  - mcherm 10y ago
    The difference between an acquisition cost per customer but making money on each transaction and losing money on each transaction is that the first can be a viable business if you can retain customers long enough while the second will always lose money. Offering below-cost deals to all customers for a time (to acquire them) then raising prices to a profitable level is different from either. Unlike the second, it might make money in the long run. Unlike the first, the ability to make a profit hasn't been demonstrated yet.