Lyft files IPO, reports net loss of $911 million, revenue of $2.1 billion - Sensationalist Headlines

https://www.businessinsider.com/lyft-ipo-public-s-1-filing-details-2019-2 Lyft publicly filed its IPO registration on Friday, kicking off what could be a record-setting year for multibillion-dollar private tech companies hitting the public markets. Lyft didn't disclose in the filing what price it plans to list at in its initial public offering. The ride-hailing service was last valued at $15 billion in a 2018 funding round, though it is reportedly eyeing a valuation of between $20 billion and $25 billion when it goes public. Lyft will list on the Nasdaq under the ticker symbol LYFT, according to the S-1. The company is working with JPMorgan, Credit Suisse, and Jefferies as lead bankers on the IPO, expected in early April. In its S-1, Lyft disclosed for the first time financials that shed light on its performance. The company saw $2.2 billion in revenue in fiscal 2018, up from $1.1 billion in the year-ago period. Like many tech unicorns, Lyft still isn't profitable. The company lost $911.3 million in 2018, up from losses of $688.3 million in 2017 and $682.8 million in 2016.

I don't get how companies like this can exist, profit is the entire purpose of a company, how can you only lose money and stay operational? Do they just spend investor money and never pay it back?

Corporate welfare

venture capitalists. VCs will privately invest in a startup with a potential for high-growth in the hopes of getting a huge return on investment when the company goes public. lyft has raised almost 5 billion in venture capital money, with an expected valuation of around 15-20 billion

but they disrupt so they gotta be worth money! Like I've only been in the corporate world for a couple years but I already can tell most of the free market is full of shit. I've practically wasted the last few months simply because companies selling shit to us for assloads of money keep deciding to stop selling us shit for assloads of money. Like there's no fucking free market forces there, the demand is fucking huge and projected to grow year after year for over a decade and nobody wants to supply for it.

Expectation of future profit. Most investors aren’t as short-sighted as Facepunch makes them out to be

Net Negative profit doesn't mean a corporation isn't operationally unsustainable. They might get short term loans to fund operations. Companies are kept alive because of expected future profits

downside is that this is literally a bubble that is similar to the one that caused the 2008 crisis

So we have companies that post record profits and fire their employees so there's even more money for investors, and then we have companies like this who are in the red but people still invest. I don't understand high finance, on one end they're squeezing out as much money as possible at the expense of people, and at the other it seems like a literal gamble where you might get double your return or possibly none at all.

I've always thought of VC's like movie executives where one good movie keeps the studio afloat despite a bunch of flops. You make ten $10,000 investments and lose money or gain little on all of them except for 1 that maybe returns something high like $200,000. So you keep doing the same thing and as long as 1out of every x investments is a huge success, you're making money in the end. From the other side, a company like like Lyft could never (or have a very difficult time) getting off the ground without either a bank, or venture capitalists giving them money to invest in technology and personnel. Most companies will usually operate at a loss for their first few years. The hope is someone will see the potential for your business and give you money to start with the hopes of returning money for them in the end. Amazon for example took almost "10 years. They started in July 1994. They reported their first profit in Jan. 2004 for the last quarter of 2003."

They're not short sighted, they're egotistical. They don't care how our planet fares in 50 years because they'll be dead, and they don't care about the rest of society living in shit as a consequence of their actions because they are rich and can pay their way out of it.

They're different types of investing, creatively referred to as low-risk and high-risk. The low-risk former you describe are people who want continual, steady growth - a safe, pretty-much-guaranteed constant return on their money. Think of it is as a second income, something that can be relied on to be there. Obviously they won't complain about making lots of money from their investments, and some shitty things like cutting the bottom line to boost those numbers happens, but in general, low-risk investors don't expect significant sums on their return over the short term. The high-risk latter you describe is very much gambling in a literal sense. As Defy so aptly described it, they will make several different investments, all with a high probability of failure, banking on the statistical implication that one of them will do exceptionally well, and in doing so, not only cover the losses of the others, but also yield a hefty sum in return. High-risk investing is just that - far more people (likely; I have no sources for this beyond intuition) break and lose everything they throw in than those you hear about who succeed. Those who stay in the game are those who develop a sense of the market and can make educated guesses on what is least likely to fail - there's still a high probability, just less high than other investments.

So what the fuck do they spend their money on? They literally have no overhead. All they have is those signs and an app???

it's not like you can just snap your fingers and magically have an app that works and will continue to work indefinitely

Holy shit you should take this straight to Lyft Central Control. I think you're onto something here bro

Operating at a loss is also a good way to undercut, outlive and then kill off existing sensible competitors.

how hard can it really be to take positions that are actually based in fact?

I don't think you can really compare new tech companies to banks bundling debt. This is more like the dot com bubble, but literally 1/100th as big.

Statistically a lot of posters here are 16-year-olds.

Strong disagree. When you think of 'social network', Twitter - for example - is in your top 4, despite having a continuous year-after-year negative profit. When you think of "Uber alternative" you think Lyft, and with the right marketing, they might turn a profit. Uber itself lost a staggering $4.5 billion in 2017, then made back $2.5 billion in the first three months of 2018 - the second quarter they've ever reported profit (first was in 2016). SurveyMonkey, although a bit dated, has never earned profit yet anyone over the age of 30 will know it by heart. Occupying space in consumer minds is all companies have ever tried to do since the advent of advertising and actually tangibly having that space is gold, and will only increase in value in the future as consumers age and retain brand loyalty. Nobody reading this will forget the brand 'Twitter' as long as they live. Even if someone mentions "Lyft, the ride-sharing service" when you're 70 years old, you'll know at least partially what they're referring to. Investing in brands instead of products is an easy way to make long-term money. Is it garbage as a product? Maybe, but it doesn't matter. The free market only works if consumers are fully knowledgeable about what they consume/can consume, but they're not; effective marketing is proven to work. The true value of Facebook stock is in its ubiquity, not its product.

It's like /r/latestagecapitalism. They've correctly grasped the problem(s), but their idea of the solution is completely devoid of considerations of nuance or complexity.

The 2008 crisis was caused by the housing market being inflated by sub-prime loans, allowing people with bad credit to easily purchase homes they had no business buying. There is not even a remote similarity between that situation and this one.

Is it, though? I'm no expert (obviously, neither are most people here on Facepunch), but where are the actual examples of this? Both Lyft and Uber seem to employ the same tactic - eat a bunch of losses until the competitor capitulates and ...then eventually you raise the prices by 50% to actually become profitable? I'm not sure that's a viable tactic, when the barrier to entry isn't that high; there's not that much infrastructure to build up compared to many other industries, so what's there to ensure that another app doesn't come along and start undercutting them again? Or prevent people from start using public transport more because suddenly not every ride is being subsidized? Amazon is a great example of not achieving much profitability, but growing immensely - I'm not sure Lyft and Uber are in the same boat, and there's a reason why Uber has been trying to get into the autonomous car gig, because paying bags of meat to drive people around have a fairly fixed cost.

this is exactly how you monopolize. Even the board game plays like this. You undercut your competition as you grow out, kill them, and then charge whatever. my cable plan has gone to shit this last year coincidentally around the same time that my provider became the largest cable provider in the country thanks to a mega merger. uber and lyft got rich by breaking the laws everywhere until they got big enough to change them to favor themselves, especially outside the most heavily regulated places like NYC

Pretty much every single younger company that I have looked into operates at a loss for a couple of years at the very least. It's a race to reach a certain size and marketing threshold so you can actually sustain profitable operations. And as @dissemminate pointed out the next best thing to profitable operations in terms of value to the company is marketing awareness. If it is considered worthwhile to throw tens of thousands at a dozen companies for one that will be profitable in the public market, then imagine the excitement at a company that is both profitable and a household name. This is why there is so much emphasis on marketing in today's corporate landscape: as long as the public knows about you well enough in a positive light, investors will keep throwing money at you. Because, suffice to say, the potential payouts are staggering. The problem is that this incentivises a domestic investment culture that is focused entirely on short term gains. More regulation improves the stability of the marketplace and reduces the risk, but the payouts aren't as large. With great risks comes the possibility of great reward.

our entire VC system just sucks in general today, the money that was once aimed at cutting edge tech is being dumped on scooters, apps, and amazon-clones because the payout for being acquired by somebody like google is huge

Random example: a dude called Andy Bechtolsheim was one of the first investors in Google, buying a $100k stake it before it was even formally registered as a company. The company then proceeded to lose an asston of money for three years. In 2010 it was estimated by Forbes than his initial $100k investment was now worth $1.7 billion People invest in companies like Lyft hoping they are getting in on the ground floor like Bechtolsheim did

Think of it this way: You have a workshop with 50 employees, making a product. A competitor comes that uses new, unproven technologies that require only 5 employees but are too expensive for you to integrate because you don't have enough profit margin to basically refit your entire production - additionally, the maintenance costs are higher than the wages of 45 of your employees. However, because your competitor has funding, they can continue to operate at a loss, hoping that with technology getting more mature, the associated costs will drop gradually and their method of manufacturing will have greater profit margins than yours. By the time that happens, if it even happens at all, your company has basically been driven out of the market. Of course there's a taste of automation in this example as well, but a company doesn't have to specifically try to get rid of you to achieve that. The bad side of having companies funded to operate at a loss is usually market disruption. The potential good side is actually the same, market disruption. Funding like this allows for new technologies to be researched integrated, even by smaller companies that don't have the money to take risks. Twitter for example took 12 years to become profitable and despite what people think of it, it's now a part of our daily life.

how is a lot of people buying into something expecting return on investment where will be none ANY different from the housing crisis where the actors are just different, the banks giving out loans like candy expecting ROIs where there will be none

What are you talking about? Nobody in this thread is talking about solutions.