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If that R&D doesn't pan out they essentially will go bankrupt quickly as their R&D spending was 81% of their revenue.
by data_spy 7y ago
If that R&D doesn't pan out they essentially will go bankrupt quickly as their R&D spending was 81% of their revenue.
- deanmoriarty 7y agoWhy couldn't they issue bonds and get access to cheap debt like Netflix or Tesla?
- b_tterc_p 7y agoThey can issue bonds. Although they’ll probably pay a much bigger risk premium than Netflix or Tesla. It would likely tank the stock price further though. They’ll need non trivial bonds to merit additional quarters of operations- and in the event of bankruptcy creditors get preference over shareholders
- YjSe2GMQ 7y agoUber issued bonds: https://www.bloomberg.com/news/articles/2018-10-16/uber-is-said-to-boost-bond-sale-to-2-billion-as-orders-swell https://www.bloomberg.com/news/articles/2018-10-16/uber-is-s... Rated by Moody's as B3 and by S&P as B-, which is the bottom of "Highly speculative": https://en.wikipedia.org/wiki/Bond_credit_rating#Credit_rating_tiers https://en.wikipedia.org/wiki/Bond_credit_rating#Credit_rati... For comparison, Uber bonds are one grade lower than Argentinian bonds: https://tradingeconomics.com/argentina/rating https://tradingeconomics.com/argentina/rating Such credit ain't cheap, especially now that interest rates are no longer zero.
- naveen99 7y agoThey sold $2billion in 8 year bonds at 8% yield. i think their cost of capital will go down now that their contribution margin is positive (9%)
- nwah1 7y agoWhat is included in that R&D category? If it is mainly just maintaining their infrastructure, then there isn't much research happening, and thus nothing to even hope for in terms of breakthroughs.
- adamson 7y agoIt grew by 10x, but I doubt Lyft's infrastructure or day-to-day engineering costs have grown anywhere near that much. That said, I have no idea what Lyft could spend $600MM on researching.
- nwah1 7y agoSelf-driving cars would be the only thing that makes sense, but it is a longshot and spending 80% of your revenue on that seems nuts.
- ramses0 7y ago$600MM/yr @ $200k/yr == ~3000 engineers?
- jackmodern 7y agoLyft has 2000 people in their tech org (maybe 1500 engineers) and the lowest paid engineers at Lyft are probably ~300 total comp.
- sct202 7y agoIt includes $500m in stock based compensation this quarter under R&D. IDK if this is a one time thing or what though.
- cozzyd 7y agoThey're experimenting with new ways to lose money, apparently.
- tzhenghao 7y agoProbably their Level 5 AV initiatives. Even that domain has long tails that might take more time to iron out than expected. I'm curious if they even have that long of a runway to make it happen.
- toomuchtodo 7y agoTheir runway is about six quarters. You decide.
- mlinsey 7y agoI believe it's common for tech companies to consider all engineering / product payroll as R&D, even if we might consider some eng work as maintenance. In this case a lot of it is stock-base compensation being recognized post IPO. In any case, this isn't just far-out tech stuff like self-driving cars.