Lyft is the third-largest ride-sharing company in the world. They’re just behind Uber and Didi, a China-based competitor that Apple invested in. Like Uber, they make money when users request taxi rides in cities around the world. They also have a network of independent contractors who totally aren’t Lyft employees, also just like Uber.
Uber, however, is having a rough few months. The company faced a boycott and lost thousands of users when they did some confusing, shady stuff related to President Trump. Uber later came under fire when a former employee spoke out against their awful, anti-feminist practices. Their CEO is also a bit of a knob. There’s more, but you get the idea.
After seeing Uber struggle recently, Lyft decided to capitalize on their competitor’s misfortunes. They donated to the ACLU after the company’s Trump-related debacle. They had a female executive speak about the importance of women in technology after the aforementioned Uber employee published her blog. They also let users tip drivers, something noticeably absent from Uber’s app.
Thanks to their recent surge in popularity, Lyft raised $500 million more to help them expand and continue doing what they’re doing. But why would someone give Lyft, a lesser Uber, so much money?
Lyft is not Uber.
Uber is worth approximately $68 billion. As of today, Lyft is worth a more modest $7.5 billion. Sure, they have the same business model and want to automate their entire fleet one day. Yet the San Francisco-based company has a less aggressive and more lighthearted image than their American rival. They claim to be “woke,” which is “cool mom” levels of embarrassing, but the company has a noted reputation of being friendlier to drivers, customers, and workers. Uber can’t say the same.
Lyft is no longer in trouble (for now).
Unlike Uber, which wants to raise as much money as possible and go public, Lyft recently contemplated selling their entire company for $9 billion. Though $7.5 billion is not $9 billion, this new $500 million in funding from an unknown investor proves investors have faith in Lyft to compete with Uber. It will also allow them to continue as an independent company and not just another startup on the market.
At the same time, Lyft is not profitable. They lose hundreds of millions of dollars a year, and have ridiculous operating costs. By securing new funding, they can stay afloat for a bit longer. If they don’t stop losing money, they’re going to need to find a buyer rather soon.
Should you invest in Lyft?
You can’t. Like Uber, Didi, and other competitors, Lyft is a private company. You could only invest in them if you’re a venture capitalist, which would entail giving them millions of dollars. If you have that kind of money and think Lyft has a bright future, bully for you. Until the company goes public — if they do — you can simply keep on using their services and supporting them as a customer.