For Uber and Lyft, reality is arriving soon

Ride-sharing company Lyft begins trading on the stock market on Friday. Soon, they will be joined by rival Uber. Both companies will be worth tens of billions of dollars.
But, with neither of the firms ever coming close to turning a profit, the flotations are being seen as a reckoning – not just Uber and Lyft, but for the so-called “gig economy” itself, the business model that does away with traditional employment in favour of dishing out small jobs via an app.
Uber and Lyft have, until now, been funded entirely by unprecedented amounts of venture capital. Uber in particular has made eyes water: it attracted almost $25bn, earning the company the title of “most valuable start-up in history”. Lyft, which has not (yet) expanded globally, raised $5bn.
Yet for both firms, reality is arriving soon.
Once public, “there’s no more hype – it’s just results”, said Alex Wilhelm, editor-in-chief of Crunchbase, a site which tracks the financial health of technology firms around the world.
“It’s going to be tough.”
In 2018, Uber suffered a staggering net loss of $1.8bn. Lyft lost $911m. Those losses are narrowing, and revenues are increasing, but there are clearly massive hills to climb. And so, for the millions of people around the world that use ride-sharing, efforts to balance these very unbalanced books may quickly become apparent.
“Eventually they’re going to have to raise prices on passengers to be profitable,” suggested Dara Kerr, a reporter who covers the gig economy for technology news site CNET.
“They’re also trying to make bets on other types of transportation, like the scooters and bicycles and self-driving cars. Because all three of those don’t have the most costly ingredient, which is the drivers.”