![]() ![]() The stubbornly low supply of drivers, the backbone of Lyft’s ridesharing network, continues to pressure costs higher for ridesharing and delivery businesses and has forced Lyft to offer higher incentives to entice drivers back to the platform. If Alphabet’s (GOOGL) Waymo, General Motors’ (GM) Cruise, or another platform successfully develops self-driving, they could easily launch their own ride-hailing and delivery service rather than licensing the technology to the likes of Lyft and Uber. The sale of Level 5 also means Lyft is now dependent on outside firms to develop self-driving, which eliminates any competitive advantage Lyft might gained from owning that technology. Lyft notes the sale will remove $100 million in “annualized non-GAAP operating expenses”, which is a rather small drop in the bucket considering Lyft’s Core Earnings in 2020 were -$1.7 billion. Lyft agreed to sell its self-driving unit, Level 5, to Toyota subsidiary Woven Planet for $550 million. In fact, costs look far more likely to rise, and I expect margins will get worse, not better. What’s Not Working for the Firm: Despite top-line growth, Lyft remains highly unprofitable, and it’s (unlikely) path to profitability (autonomous driving and/or lower labor costs) isn’t looking any more likely. Going forward, management guided for 2Q21 revenues to increase 12-15% QoQ, which would also be >100% above 2Q20. The firm’s adjusted EBITDA (which provides a misleading picture of the firm’s true losses) improved both QoQ and YoY but remains negative. ![]()
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