Rideshare as a long-term investment? Right up there with owning an airline. Heck, even if the rideshare companies were operating at scale – running on autonomous vehicle fleets – would you really want to own that business? Depreciating assets, multiple competitors (it will be more than Lyft and Uber), and thin profit margins (we are a ways away from profitability) seem more like a recipe for a headache.
Too frequently investors are spun by VCs – the self-anointed smart guys in the room – only to subsequently realize that VCs are skilled promoters but not necessarily skilled operators. Rideshare is one bridge I won’t be sold. I don’t care how many potential global riders exist or will be, nor am I excited about add-on services.
Lyft and Uber don’t operate in a vacuum. All of the autonomous OEMs will roll out rideshare taxi services (a la Waymo) prior to pursuing the consumer market. Why? Because the cost per vehicle mile is too high for individual consumers to absorb. I suspect a good 20 years of autonomous taxi services in mature markets before autonomous vehicles begin to reach consumers at scale. This translates to stiff competition for Uber and Lyft in the interim- neither of which is turning a profit (see our extract from Lyft’s S1 filing below).
I’m a fan of enterprise software/ information services companies that have defensible leadership positions within large markets. I also admire companies that have built such scale that they are within striking distance of most every sector of the economy. Perhaps no mega cap company is as bold as Amazon. If you haven’t seen AmazonGo’s checkout technology, it is sure to be a retail game-changer (and a driver of Amazon Prime memberships as well as AmazonPay transaction volume – but that’s a story for another day).
In conclusion, don’t be spun by the VCs on the rideshare fever dream.
Google Drive link to Lyft financials click here
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