The cab-hailing service Lyft.com has over the past few months gained a significant advantage over its rival Uber Technologies Inc., with Lyft now controlling a third of the U.S market. Recently, the CEO of Uber stated that the U.S is no longer profitable to them, a statement that marked defeat to the fast-rising Lyft.
A major investor in the company is expecting that Lyft will see its shares in the U.S. ride-hailing business go up by 61% by the end of this year. This figure will see them control a third of the market in the country. The gain for this company is coming at a time when Uber is faced with so many scandals both at home and abroad, with their former CEO resigning back in June.
According to the documents released, Lyft is benefitting from the mistakes and management issues that are currently plaguing Uber, it’s number one rival. Lyft has used the advantage to not only gain market share but to also boost its sales, with every step getting them closer to profitability.
Even with those figures, Lyft is currently looking for extra funding as the company keeps spending more, with people close to the issue concerned that the spending will unlikely reach a breaking point. The document indicates that Lyft is estimating that it would escape the red for the first time this year. The company when giving an outlook for their earnings didn’t include expenses such as taxes and interest, estimated that the earnings would go up by $500 million by 2019 while $1 billion is expected by 2020.
The problem though is that the company is spending at a rate that is faster than expected, thus they aren’t taking full advantage of the current weak position of Uber. They, however, told investors that the company won’t break even by the end of 2018. This was revealed by anonymous sources that are close to the situation.
For this year, Lyft is on track to record a revenue of around $1.5 billion. This is the amount it is expected to generate after paying their drivers, with their losses projected to be around $400 million. This information was revealed in the document that was prepared at the end of their Q2. The company has been spending heavily on them, with their funds going into a marketing campaign. Investors are expecting a loss of around $600 million to be recorded this year.