Ride sharing companies are getting a lot of press lately, not all of it good. Between feuding with the taxi industry, getting flak from unions and logging complaints on inconsistency of service, it’s definitely a time of growing pains for the still-budding industry, even as Uber and others expand their market shares.
Lyft is seeing its share of troubles lately as it continues to come in second to Uber. According to a story in the New York Times last Friday, Lyft had been seeking a buyer and as of press time, was unsuccessful.
The story went on to say that Lyft had talked with companies such as GM, Apple, Google, Amazon and even Uber to purchase the San Francisco-based company. While GM took talks the furthest, no buyer ultimately stepped forward, leaving Lyft an independent.
The company is in no fear of going out of business. In fact, it has $1.4bn in cash reserves, so it should be able to operate for the foreseeable future. But running a rideshare takes plenty of capital, even if the company doesn’t have a fleet of cars like a taxi service. Uber is, so far, way ahead of Lyft on the fundraising front, having agreed to merge its Chinese subsidiary to Didi, the ride hailing king of China.
Part of the reason Lyft may have failed to sell was its asking price of $5.5bn. Some outlets said Lyft was looking to go as high as $9bn. Another reason is the profit margins. Drivers keep as much as 25 per cent of some rides, meaning that after market costs for the company, there isn’t enough left over to warrant that inflated valuation.
Lyft is none too happy with Uber lately. Where once the firms got along and shared the ride sharing business, now there is some voluble griping. A story in The Verge found that Lyft wasn’t pleased with how Uber’s CEO Travis Kalanick undervalued Lyft’s worth.
Apparently, Kalanick told investors that he wouldn’t pay more than $2bn for Lyft, and Bloomberg reported that Kalanick wouldn’t try for an acquisition because an antitrust investigation would likely come next.
Uber’s undervaluing is par for the course in business – a ploy to bring prices down – but it’s not the first time Uber has gotten in Lyft’s way. Apparently, according to The Verge, Uber would call and request rides from other ride shares, including Lyft, and steal the best drivers, which has resulted in thousands of canceled Lyft rides. These “unsavory” practices are not going unnoticed by Lyft.
"The Bloomberg report is a classic example of Uber using unsavory tactics in an attempt to impact our business," said a Lyft spokesperson to The Verge, echoing the sentiment. "Lyft is not for sale, we are on a fully funded path to profitability."