Lyft IPO repository shows loss history and no clear path to profitability – Quartz



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"We have a history of net losses and we may not be able to achieve or maintain our profitability in the future, Reads the second risk in Lyft's March 1 prospectus for an initial public offering.

In other words, Lyft has never made money and can not promise it.

Lyft posted a loss of $ 911 million, despite revenues of $ 2.2 billion out of $ 8.1 billion in trips and other sales. This was up from 2017, when it recorded a net loss of $ 688 million, and from 2016, the year when its net loss was $ 683 million. Adding that up, you get a net loss of $ 2.3 billion over the last three years. It is a lot of money!

Of course, losing money is all the rage in Silicon Valley, where investor subsidies are paramount and start-ups who raise money to buy users are comfortable with 'offsetting volumes'. Profitability is also no longer a prerequisite for a technology. company to make public. Google (now Alphabet) and Facebook were profitable when they went public, but Twitter was not either, nor Spotify, Blue Apron, Parent Snap, Snapchat, Box, Dropbox, Etsy, Roku, Square, Shopify, Twilio and many others.

Why is it important? Well, a business that only loses money is not a very good deal. Blue Apron, a provider of meal kits, was valued at $ 3 billion by private investors who thought they could redefine the way America eats, though it has never made any money and spent money. are considerable in marketing. Government procurement has been less tolerant than venture capital investors. The company's shares have been pummeled since trading began in mid-2017 and now stand at just over $ 1 per share. It appeared a little earlier in January when Blue Apron announced its intention to finally become profitable in the first quarter of 2019.

In addition to its loss history, Lyft's IP filing does not give any reason for potential investors to believe that it will soon change course. "Our expenses are likely to increase in the future, as we develop and launch new platform offerings and capabilities, expand into existing and new markets, increase sales and marketing efforts, and continue to grow." to invest in our platform, "writes Lyft in his paper. "These efforts may be more expensive than expected and may not result in increased revenues or growth in our business."

In other words, he plans to spend more and could spend more than expected, which may not increase revenues. This is not reassuring!

Even more urgent, Lyft could run out of money. The company had $ 1.1 billion in cash and cash equivalents at the end of 2017. As of December 31, 2018, this stock had dropped to $ 518 million and competition with Uber is not expected to become easier. "We believe that existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months," Lyft explains in its prospectus.

The company will raise funds through its public takeover bid (this is one of the reasons why startups become public), but it seems safe to say that its current rate of spending n & # 39; It is not sustainable and the profitability remains very distant.

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