Lyft Inc. has gained significant ground on its rival, Uber Technologies Inc., and is expected to grab more market share in the U.S., Bloomberg reports, citing a private Lyft investor document.
A major investor is projecting Lyft will have boosted its share of U.S. ride-hailing business some 61 percent by the end of the year, climbing to about a third of the market. The gains come as market-leader Uber’s reputation is in tatters following a string of scandals that culminated with the resignation of its chief executive officer in June.
Projections outlined in the document depict a company that’s benefiting from the missteps and management turmoil that distracted Uber, its main rival, for most of the year. Lyft is not only gaining market share, but also boosting sales and getting closer to profitability, the document indicates. Even so, Lyft is seeking additional funding and ramping up spending — making it unlikely to reach break-even as quickly as the company had predicted in the document, according to people with knowledge of the matter.
The document shows that Lyft projected it would escape the red for the first time next year. The San Francisco-based company was forecasting that its earnings, excluding expenses such as taxes and interest, would increase to US$500 million in 2019 and US$1 billion in 2020. However, Lyft has been spending at a faster rate than expected to take advantage of Uber’s weaker position and now is telling investors the company won’t break even by the end of next year, said the people who asked not to be identified discussing private financial information.
This year, Lyft is on pace for US$1.5 billion in net revenue — the amount of money it generates after paying drivers — on losses of US$400 million, according to the document, which was prepared at the end of the second quarter. Since then, Lyft has spent heavily on a nationwide marketing campaign, including TV spots with actor Jeff Bridges. Investors are now anticipating losses of close to US$600 million in 2017, two people said.
Lyft is getting another injection of cash to maintain its growth trajectory — some of it coming from backers of its arch-rival. Fidelity Investments, an Uber investor, is in talks to participate in a US$1 billion financing round led by Alphabet Inc., another investor in Uber, that values Lyft at $11 billion, according to people familiar with the matter. Existing investors KKR & Co., Janus Capital Management LLC, and AllianceBernstein Holding LP also are planning to join the round, the people said. Lyft, KKR and Fidelity declined to comment.
Before this year’s crisis at Uber, Lyft’s share of ride-hailing spending in the U.S., the only country where it operates, was stuck in the low-to-mid teens, the investor document shows. Those estimates include some financial information on parts of Uber’s business, such its food-delivery service, that Lyft doesn’t have, according to a person familiar with the figures. Removing those sales, Lyft’s market share for 2016 was closer to 20 percent, said the person, who asked not to be identified discussing private matters.
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