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Lyft’s revenues double, losses quintuple and prospects darken

economist.com

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Re: Lyft’s revenues double, losses quintuple and prospects darken

#121

Post by vlovich123 »

CPLX wrote: post #98
Domenic_S wrote: post #79

Earlier quoted context omitted.

There are a ton of factors that make your DSLR to Autonomous Car comparison flawed. The utilization rate of the camera is going to be far lower than the rate of the car. The camera may sit on a shelf for weeks before being rented for a single day, so the per-rental price must be relatively high. The market is small. Also, cameras are comparatively easy to break, and the technology goes out of date extremely quickly a…

> There are a ton of factors that make your DSLR to Autonomous Car comparison flawed. Indeed. The biggest one of course being that there’s no such thing as an autonomous car.

Snarky but inaccurate reply. They do if you're a resident of Phoenix. Prices are equivalent to Uber but it's still too early to conclude what's behind those prices. Are they sustainable at scale? Is it just to avoid having the price floor drop out from them if they're viewed as purely a discount option? Is it to dissuade having too many users on the system all at once?

Re: Lyft’s revenues double, losses quintuple and prospects darken

#122

Post by britch »

OliverJones wrote: post #76

Fundamentals question: Can somebody explain how these ridesharing companies expect to turn a profit, eventually? If you lose 50 cents on every ride, how do you make it up in volume? Every ride is subsidized by the Sand Hill Road crowd. They're a great deal. I took a 40-min ride yesterday for US$12.50 in a high-cost-of-living traffic-clogged city. How can that make sense? A ride in a sketchy 1970s-era New York City gy…

The idea (urban myth?) I've heard for discussion's sake:

The long term bet is on them becoming THE way to get around and monopolizing the market (or a chunk of it at least) and THEN jacking up prices.

If you undercut cabs and public transit long enough, they'll have to react to lower ridership and reduce availability. Sorry, no late night buses, most people are taking a very inexpensive and convenient Lyft home. Now that there's no late night buses, we can charge 3X the cost.

Re: Lyft’s revenues double, losses quintuple and prospects darken

#123

Post by astrodust »

GCA10 wrote: post #87
wonderwonder wrote: post #9

Very interesting process going on right now with Lyft & Uber both losing money and some of their drivers trying to stage protests and strikes. The drivers appear to rely on the company as their primary source of income and want more money yet at the same time the companies are operating at a loss. Were they to increase wages (as % of every ride) it stands to reason the losses would widen. If they get to wide the comp…

Right now, Uber keeps 22 cents on each dollar paid by passengers, as its fee for creating the app, keeping it working, etc. That's cheap relative to the iTunes store, which keeps 30%. It's preposterous compared to the 3% that real-estate agents get for buying or selling a home. We really don't know what the "fair" rate is for running a ride-hailing business. We know what's been collected to date in a venture-funded d…

22% is really high for what's effectively a dispatch fee.

If you factor in the way Uber can dictate price, you may actually be "paying" a higher fee versus what you could've made on your own. If they force you to accept a 40% discount that's got to be factored in, too.

Apple takes 30% but they don't tell you what price you can charge.

Re: Lyft’s revenues double, losses quintuple and prospects darken

#124

Post by jartelt »

swarnie_ wrote: post #31
return1 wrote: post #21

Uber and lyft look like a charity set up by VCs to provide people with cheaper transportation. Who knows what will happen once they increase fares as they promise to investors

As soon as one of them increase prices to generate profit ill just move on to the next ride sharing app, then the next, then the next. You'd need a price fixing scheme worthy of British Airways make this work.

How do Delta, United, American Airlines, and Southwest all operate within the same market and not have fare wars constantly leading to bankruptcy? If you were correct, it seems like it would be impossible for several airlines to operate within the US. Yet, several airlines somehow manage to set prices that allow them to operate. I'm not saying Lyft and Uber will ultimately be successful (I don't know), but it wouldn't unheard of for multiple players to operate in the ride sharing market and not constantly have a fare war.

Re: Lyft’s revenues double, losses quintuple and prospects darken

#125

Post by bmm6o »

guntars wrote: post #77
SilasX wrote: post #22

Earlier quoted context omitted.

That figure comes from taking total losses and dividing by the number of rides. It's not the same as saying that the costs of providing the ride itself are $1 more than they charge for the ride. (The fixed vs variable distinction I was making above.) Uber's costs of providing a specific ride are: Driver's cut, maps licensing, cloud charges, data transfer. That is rarely more than the cost of the ride. Remember, Lyft…

You’re forgetting the cost to develop the software itself. It’s like saying a gigabyte of data on a wireless carrier cost them pennies in electricity and bandwidth.

It's still not a per-ride cost.

Re: Lyft’s revenues double, losses quintuple and prospects darken

#126

Post by [deleted] »

dd36 wrote: post #74
warp_factor wrote: post #27

Earlier quoted context omitted.

Analysts predict where the stock is going in the short term based on "sentiments" and "emotion". I wouldn't bet anything on them.

That’s not true. They do 12-month price targets based on fundamental financial analysis. It’s the short term that they’re not predicting.

[deleted]

Re: Lyft’s revenues double, losses quintuple and prospects darken

#127

Post by m_ke »

CPLX wrote: post #96
m_ke wrote: post #80

Earlier quoted context omitted.

Because they'll be able to undercut any small competitor that attempts to enter one of their markets by subsidizing it with revenue from everywhere else.

Not really. It’s a large market with almost no barrier to entry. Either they have huge margins or they don’t. If they do have large margins someone will come along and attack the most profitable segment of the business. That could be airport rides, or having extra cars outside the end of a sporting event, or whatever. As long as switching costs for customers are low then they can’t defend high margins. For monopoly t…

Supply is a barrier to entry. These 2 sided market places require having a large supply of drivers and riders to be viable. A new competitor would probably need to come in with a managed fleet and be ready to operate at a loss for a really long time.

At their current scale uber and lyft don't need to have huge margins, they just need to break even and can make up for it with volume. Like amazon they could undercut any new competitor and play the long game. Their marginal costs are so low that they could win out any city with competition by aggressively cutting their 25% of the fare.

Re: Lyft’s revenues double, losses quintuple and prospects darken

#128

Post by sytelus »

SilasX wrote: post #11
wonderwonder wrote: post #9

Very interesting process going on right now with Lyft & Uber both losing money and some of their drivers trying to stage protests and strikes. The drivers appear to rely on the company as their primary source of income and want more money yet at the same time the companies are operating at a loss. Were they to increase wages (as % of every ride) it stands to reason the losses would widen. If they get to wide the comp…

That would only be true if their unit profits were low or negative. On each ride they make a lot of money. They lose money because of their huge, ride-count-independent fixed costs, like legal defense and marketing. So it's not necessarily true that giving the riders a larger cut would widen the loss, if it came with a scale-back on all the marketing.

This is what gets lost in all the negativity. Lyft/Uber can slash their R&D by 90% and they wouldn't have much trouble running normal operations as minimal app-based cab companies. At 2,000 minimally required head count for running operations, they would probably average $2B in annual expenses. However suddenly they would be gloriously profitable with huge scalable upside and small fixed costs.

Here are some calculations:

Currently per mile cost of car (fuel, vehicle, insurance) to driver is about $0.50. Uber/Lyft typically charge $2.00 per mile so $1.50 goes to driver. Subtracting cost of car, driver pockets about $1 per mile which translates to $30/hr in urban areas.

One issue however is upper limit on the business. There is probably demand for 100,000 cabs each hour in US. That translates to may be 2-3 million miles per hour. if Uber can capture 30% of this, then their US revenue would be at about $4B. The international revenue perhaps adds another 2X so we are looking at total revenue of about $12B @ 30% market share. There is room to grow by almost 100% here in terms of market share so with $24B revenue and $2B of minimally needed fixed cost for operations, this seems fairly sustainable and astoundingly profitable business to me.

Re: Lyft’s revenues double, losses quintuple and prospects darken

#129

Post by username223 »

moorhosj wrote: post #59
jahlove wrote: post #46

Earlier quoted context omitted.

doesn't the ride cost go down substantially if they ever get autonomous vehicles on the road? I believe that is the end goal.

Will they own those cars? Today, they rely on driver's providing their own cars. What will be the capital costs of purchasing and maintaining the autonomous fleet?

This is the part I don't get. Right now they rely on their employees to buy, maintain, and depreciate their own cars. The natural next step would be to let people lend their cars to Uber/Lyft when not in use.

But they're sinking tons of money into self-driving, which means they would bear the costs of buying and maintaining their fleet. That's a completely different business model, and seems like a tough pivot. And as mentioned elsewhere in this thread, other companies are better-positioned to do this, with better manufacturing, more sensor data, more experience, or all of the above.

Re: Lyft’s revenues double, losses quintuple and prospects darken

#130

Post by hellllllllooo »

BurningFrog wrote: post #93
hellllllllooo wrote: post #75

Earlier quoted context omitted.

> but this is a gig / 'work only when you want This is not 'a work only when you want' job. People do it full time to feed their families and after doing it for years find it difficult to move to a different role for a variety of factors. I'm sure they would go get a better paying job elsewhere if it was easy. It used to be a 40 hour job when they joined but Uber/Lyft have gradually reduced earnings. Now it's 60-70 h…

What you're describing is that people want to work 60-70 hours/week.

Obviously not. They're striking.
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