Can anybody be surprised that Lyft’s stock sank below its opening priceon the Monday after its debut on the public markets?
It’s not just the stock: Lyft the companyis in dire straits and has been for years because it has:
- An indefensible technology combo platter (GPS, Credit Card, Map) that establish and startup competitors can readily rip off
- No local benefits from a national/international footprint*
- No loyal relationship with its customers
- A deteriorating relationship with its drivers
- A fierce competitor in Uber, with which it is in a price war that accelerates commodification
- Coming-real-soon regulation from municipalities and states, if not the federal government
- No profits.
Self-driving cars present no hope
Self-driving cars will save neither Lyft nor Uber because one of two conditions will occur.
Condition #1:The ride-hailing companies will have to take on all the costs of vehicle ownership, maintenance, cleaning, fuel, and insurance that they currently offload to their human drivers.
Even if Lawrence W. Burns, co-author of the wonderful book Autonomy, is correct with his model in which per-mile costs in the U.S. will drop from $1.50 to 20 cents when self-driving cars pull up to the curb, that still represents a short-to-middle term increase in costs to ride-hailing companies.
Condition #2:The ride-hailing companies will avoid owning the fleets of self-driving cars, at which point they will become service layers connecting fleet owners and riders, which will not provide enough profit to satisfy their shareholders.
If the stock continues to decline, as I suspect it will, then perhaps this will be a wake up call and investors will finally realize that unicorns are mythicalcreatures.
* See this HBR piecefor a savvy explanation.
(April 1, 2019)