The same is likely to be true of Uber when it lists. Only more so

O N MARCH 29th Lyft became the first ride-hailing company traded on a stockmarket. The company’s share price jumped by 9% on its debut, valuing it at $22.4bn. By May 7th, the day it reported results for the first quarter as a public company, it was worth $17bn. Some investors thought even that was too generous. Lyft’s share price fell by another 11% the next day.

Although it posted quarterly revenues of $776m, nearly double the level a year ago, the company also recorded a loss of $1.14bn, more than it lost in all of 2018. Most of that was down to booking stock-based compensation plans for employees, who earned $894m from Lyft’s initial public offering. Lyft’s chief financial officer, Brian Roberts, conceded that 2019 would be its “peak loss year”. It will “move steadily towards profitability” thereafter, he promised.

How that might happen is unclear. Lyft is still bleeding cash, even excluding employees’ compensation, as sales and marketing and insurance costs rise. The firm’s adjusted operating loss of $230m showed little improvement on the prior year despite fast top-line growth. And Lyft forecast that sales growth in the second quarter of 2019 would slow down sharply.

Everything that is true of Lyft also holds for Uber—only more so. The ride-hailing goliath was due to list its shares on the New York Stock Exchange on May 10th with a market capitalisation several times Lyft’s. Its losses, too, are larger. According to Uber’s own unaudited first-quarter results, it lost another $1bn or so in the first three months of the year. That brings the total since it was founded in 2009 to $9bn.