[temp1928384]

Lyft can be profitable today if they wanted to. The only reason they aren't is because they are fueling growth by propping up the supply of drivers through driver signup bonuses.

Ride sharing is generally supply constrained (meaning there's plenty of demand but drivers are in limited supply). If they stopped paying driver bonuses to expand in new markets or maintain share of drivers in mature markets, then the number of drivers would likely start plateauing or declining (due to high turnover) -> prices would increase and/or rider wait times would increase -> rider demand would fall -> growth would stall.

In short, they're choosing growth over profitability because that's what investor want to see. As soon as they choose profitability (which they might have to after IPO), their growth will come to a halt and their share price will tank. Watch.

[subroutine]

I took a look at some of Lyft's metrics [1,2,3], but would be interested in seeing a more nuanced breakdown of their expenditures. You mention driver signup bonuses are a major expense, and is "The only reason they aren't" profitable today. Is this a fact?

[1] https://craft.co/lyft/metrics

[2] https://dashboards.trefis.com/no-login-required/zrRBRShU

[3] https://www.forbes.com/sites/greatspeculations/2018/10/10/a-...

[Nasrudith]

Wouldn't it be far more sustainable to just boost base rate with the money instead to reduce churn? It sounds like a perverse incentive of metrics to reward new drivers instead of total ones.

[jonknee]

> Lyft can be profitable today if they wanted to. The only reason they aren't is because they are fueling growth by propping up the supply of drivers through driver signup bonuses.

Maybe, but subsidizing new drivers might be key to having enough drivers to satisfy rider demand. They're a commodity with very little stickiness, if Lyft has a wait people will use something else.

[fulafel]

I think it's actually less labour supply constrained than most businesses, since it's a job almost anyone can do without training other than a driver's license. And there are no big discomfort factors compared to jobs like long haul trucking or working in a mine.