Lyft’s Search for a Buyer Continues

Lyft’s Search for a Buyer Continues


Although ride-hailing company Lyft is said to have been in talks with multiple parties interested in acquiring the company, no deal has been reached yet. Lyft has and continues to face challenging competition with Uber, an industry peer that has a whopping $68 billion valuation.

According to the New York Times , Lyft has in recent months either held sales talks with or approached General Motors GM , Apple AAPL , Alphabet Inc. GOOGL , Amazon AMZN , Uber, and Didi Chuxing.

Didi is another ride-hailing service and is based in Beijing, China. Uber notably surrendered to the company in the beginning of August, in a deal that saw them selling their regional operations in exchange for $7 billion worth of Didi stock.

Part of the reason why Lyft has not been able to make a deal is due to its valuation. Lyft raised $1 billion in a venture financing round back in January, in which GM alone invested $500 million. This puts Lyft’s valuation at about $5.5 billion, a benchmark that an offer for the company would have to exceed.

The New York Times also explains that the financials of the ride-hailing industry represent another concern. According to a person briefed on the Lyft’s finances, the company is not profitable. Incentives to bring over more drivers along with marketing costs are hurting Lyft’s revenues, and will only continue to.

Still, Lyft is working on promising ventures as well. GM’s aforementioned investment also resulted in the formation of a partnership between the two companies in developing an on-demand network of self-driving cars, a rapidly populating industry. Considering the self-driving car market’s massive potential , this could become a key source of revenue for the company moving forward.

As the number of people in the U.S. who use ride-hailing services increase, the main challenge for Lyft will be grabbing a large-enough piece of that pie. If it is unable to, the company will be in trouble.

Lyft is a private company, but investors should still keep an eye on developments in the industry, as an Uber IPO could be on the menu in the near future.

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