Wednesday 18 September 2019

Lyft investors seek boost after electric bike woes

Lyft has withdrawn its electric bikes from the streets of San Francisco after battery issues
Lyft has withdrawn its electric bikes from the streets of San Francisco after battery issues

Eric Newcomer

Lyft has halted its electric bicycle programme in San Francisco after at least two of the bikes' batteries caught fire, only a couple of weeks after the company put them on the streets.

A flaming Lyft vehicle is a fitting symbol for investors' worst fears about ride-hailing. Lyft and Uber are asking investors to trust that they will some day stop figuratively setting on fire hundreds of millions of dollars or more a quarter.

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A key test for the businesses comes next week in their quarterly financial reports. The stocks have not performed particularly well since going public, and the question for investors is whether the two companies can demonstrate that their price war is now de-escalating.

Lyft staff learned this week that they are losing Jon McNeill, its chief operating officer. Meanwhile, Uber is letting go of 400 people in marketing.

In Uber chief executive Dara Khosrowshahi's email to employees about the decision, he wrote: "Today, there's a general sense that while we've grown fast, we've slowed down."

Next week, investors will look for any clues in the companies' financial projections as to whether the billions of dollars in losses Lyft and Uber have sustained might translate into profits some day.

Both apps raised prices toward the end of the second quarter. Analysts now predict Lyft will generate $397.3m (€358m) in gross profit in the third quarter, according to an average of estimates compiled by Bloomberg.

Bloomberg

Bloomberg

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