Lyft’s revenues double, losses quintuple and prospects darken • Hacker News Board

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

#151

Post by razwall » Fri, May 10, 2019, 5:04 PM UTC

jkubicek wrote: post #139

razwall wrote: post #103

Earlier quoted context omitted.

Dilution is a red herring. It doesn't change the value of your shares (theoretically). What will matter is how the company spends the funds that it raises, and whether it does so in a way that generates a positive or negative return on investment.

Here's how I'm thinking about it with example numbers: I own 0.1% of the company. Based on our market and performance and valuation of peers I expect us to be worth $10b. With no dilution my stock is worth $10mm (minus taxes, strike price, etc.) With 10% dilution per round and 4 more funding rounds, it's now worth $6.5mm.

You expect the company to be worth $10b at some point in the future, but the question to be answered is how much you think the company is worth today. Let's say you think the company is worth $10m now, which makes your stock worth $10k. Suppose the company then raises $90m in funding and gives the investors a 90% stake. Now your shares are only 0.01% of the company, and you think "Oh no, I got screwed by dilution!" But the company is now worth $100m, because it has its previous $10m worth of assets plus $90m in cash. So your 0.01% is still worth $10k.

What matters now is how the company spends the money. Hopefully they spend it smartly and the value of the company increases 10x. Now your stock is worth $100k. You didn't get screwed by dilution, you got a $90k bonanza because the company was successful.

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

#152

Post by return1 » Fri, May 10, 2019, 5:04 PM UTC

misiti3780 wrote: post #92

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…

Not to mention autonomous vehicles are most likely years away from happening

if at all, [except for people who absolutely can tolerate their problems, e.g. disabled or elderly]

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

#153

Post by Fricken » Fri, May 10, 2019, 5:04 PM UTC

CPLX wrote: post #64

m_ke wrote: post #53

Earlier quoted context omitted.

I'm convinced that the end goal is being the last one standing. Either one of them failing would guarantee a monopoly for the other and make it easier to play with the margins.

> Either one of them failing would guarantee a monopoly for the other Why? Is there some reason someone else couldn't make a basic app-based service to get taxi rides?

Anybody can make a sweet, carbonated beverage, but when Coca-Cola is faced with an ambitious and successful upstart, Coke can run at a loss to drive them out of business, or Coke can acquire them, or Coke can copy them and beat them at their own game. Uber can do all the same things to smaller competitors in it's domain.

Uber's big competitors, on the global front, aren't really competitors. Uber, Grab and Didi all own each other, and Masayoshi Son has massive stakes in all 3, it's an oligarchy. The global rideshare companies aim to bring accountability and logistics supremacy to ad hoc and inefficient transportation networks all over the developing world.

I expect profit margins will forever be slim, but if it's a safe bet that rideshare is here to stay, then I believe over the long run Uber is a safe bet. I won't be investing in Uber myself because I have morals.

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

#154

Post by dwags » Fri, May 10, 2019, 5:05 PM UTC

now you need a new side gig to support your old side gig (main gig)

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

#155

Post by justinv » Fri, May 10, 2019, 5:05 PM UTC

misiti3780 wrote: post #89

chollida1 wrote: post #4

When Lyft was doing their road show there were a few analysts who had price targets of $45 as Lyfts fair value at IPO with an acknowledgement that the amount of shares available would double, and possibly triple when all shares were off restriction, meaning that the $45 price target was a best case and we would probably see far lower once people can sell. This is a company that has maybe 33 million shares outstanding…

exercise their green shoe option. ?

Here's a good take (sorry for all the Levine links, I just think he provides crisp explanations of financial instruments) on what the underwriter does:

The way the greenshoe works is that, in the IPO, the underwriters sold 15 percent more stock than Lyft did. That is, Lyft sold the underwriters 32.5 million shares of stock in the IPO, but the underwriters placed 37.4 million shares with investors. (The underwriters sold the shares for $72, but bought them from Lyft at $70.02; the $1.98 difference is their fee for the underwriting.) The underwriters were short the extra 4.9 million shares. If the stock went up in the days after the IPO, stabilization would be unnecessary, and JPMorgan would cover that short position by buying the extra shares, from Lyft, at the IPO price. (This is called the “overallotment option,” or “greenshoe.”) If the stock went down, though, or threatened to go down, JPMorgan would cover the short position by buying back the extra shares in the market, which would have the effect of stabilizing the price, because JPMorgan would be a big buyer.[0]

[0] https://www.bloomberg.com/opinion/articles/2019-05-07/lyft-s...

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

#156

Post by unreal37 » Fri, May 10, 2019, 5:05 PM UTC

sjg007 wrote: post #116

unreal37 wrote: post #84

Earlier quoted context omitted.

This reminds me of an airline actually. Uber is "the first airline" for ride sharing service. Lyft is "the second airline". The way that you beat an airline is not to copy it's service. It's to figure out it's most profitable routes and provide cheaper service on only those routes. Ignore the unprofitable routes. If Uber can make a good profit in one city, and loses money in hundreds of other cities, someone will com…

Airlines are a good analogy. I imagine we will see Uber and Lyft miles/points as a thing. Maybe even status as a thing.. A good comparison to Uber is starbucks. Their average sale is $5 but they’ve managed to grow and grow, mostly by investing in their “partners”. Uber could do something similar. The podcast masters of scale has a good segment on Starbucks.

Right, how do the airlines hang on to their customers with cheaper competitors? Points, upgrades and luxury.

Imagine getting Uber Black upgrade for free if you've done 100 rides with them in a year....

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

#157

Post by erikpukinskis » Fri, May 10, 2019, 5:06 PM UTC

bduerst wrote: post #35

mimixco wrote: post #23

Earlier quoted context omitted.

The self driving car idea won't help Uber or Lyft for two reasons. First, neither company has the tech experience to build one. Second, and more importantly, both companies would have to buy and maintain the cars which isn't financially viable.

They're hoping you'll buy a self-driving car and then let them pay you a minimal fee to use it when you're not. The problem is that self-driving cars will change car ownership needs, and that there could be entirely different companies in the space when it does finally come around.

I'm not sure I buy that scenario...

Is there any other market where random consumers are basically acting as financiers for a commercial fleet of equipment? What's the reason for the fleet operator to involve those customer-owners at all?

In terms of immediate cost, it will be cheaper as a customer just to use the ride sharing service yourself, since you won't have to pay car payments you'll just pay the rideshare fee. Especially if the self driving software gets priced in the $10,000+ range as Tesla has suggested it will end up.

So anyone in the "budget" category will just be buying rides not vehicles. They'll have to wait 5 minutes for a vehicle, and they won't get to have their vehicle of choice, but they also won't have to deal with the hassle of running a mini carshare business, whatever that will entail.

Most people in the "premium" category isn't going to want random drunk people fingerblasting each other in the back seat of their nice car, so that cuts out the top of the market.

That leaves what... people who want to save some money but also really want to own their own car, but also are comfortable sharing it with random people?

Seems like a weird segment. Why wouldn't the fleet operator just buy cars and own them? They're going to be burning through these vehicles every 5 years anyway, what's the point of parking them in a random owner-operator's garage and having them taking it out of the fleet when they feel like it?

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

#158

Post by jjeaff » Fri, May 10, 2019, 5:08 PM UTC

Invictus0 wrote: post #30

Spooky23 wrote: post #17

Earlier quoted context omitted.

Drivers are independent agents who have every right to demand better conditions. It’s especially important to chisel every penny out of a company that will likely vanish in a short number of years. Lyft has bled money from day 1, so justifying stiffing the workers on the basis of accelerating losses isn’t logical at all. Now that the investors have cashed in, perhaps they can double down on patents on robo-cabs and s…

How can you say that Lyft is "stiffing" the drivers when they lose money on every ride? Where is the extra money for the drivers supposed to come from? Every passenger has the opportunity to tip if they want: would you also say that restauranteurs are stiffing the waitstaff?

They aren't losing money on every ride. There is essentially no marginal cost for every new ride.

Overall, they are losing money as a company. And if you divide that out by the number of rides, you can make it seem like they are losing money.

So to think they couldn't be cheating drivers because of that is like saying we know Donald Trump never cheated anyone in business from 85-95 because he lost money for every year that decade.

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

#159

Post by erikpukinskis » Fri, May 10, 2019, 5:08 PM UTC

mimixco wrote: post #148

erikpukinskis wrote: post #142

Earlier quoted context omitted.

> neither company has the tech experience to build one They have the experience to distribute software to millions of devices on a regular basis and run a logistics platform and a consumer app. That's something automakers will struggle to do. Automakers can build cars. That's something Über will struggle to do. Seems like a fairly straightforward partnership to me. There are many automakers and most of them (anything…

The tech to distribute an app? You mean Google Play, lol? A teenager can get an app in there. Uber can't afford to run a national taxi service at scale for the same reasons no one else has ever done so. The economics of a taxi fleet don't scale to that size. Owning their own autonomous vehicles would only further erode their non-existent business model.

No, I mean built the app, maintain it, build a relationship with users, get people to download it and tell their friends, all of that.

> The economics of a [self driving] taxi fleet don't scale to that size.

I'd be interested in hearing your analysis! I haven't heard that one. Tesla claims these vehicles will pay themselves off within two to three years once they can operate fully autonomously.

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

#160

Post by CPLX » Fri, May 10, 2019, 5:09 PM UTC

Fricken wrote: post #153

CPLX wrote: post #64

Earlier quoted context omitted.

> Either one of them failing would guarantee a monopoly for the other Why? Is there some reason someone else couldn't make a basic app-based service to get taxi rides?

Anybody can make a sweet, carbonated beverage, but when Coca-Cola is faced with an ambitious and successful upstart, Coke can run at a loss to drive them out of business, or Coke can acquire them, or Coke can copy them and beat them at their own game. Uber can do all the same things to smaller competitors in it's domain. Uber's big competitors, on the global front, aren't really competitors. Uber, Grab and Didi all o…

Have you ever been to a supermarket? The market for carbonated beverages is massive with lots of competitors and tons of new entrants, as well as competitive pricing and low margins.

Much like, I am arguing, the market for taxi hailing will continue to be.