Lyft behind: The economics of ride-hailing aren't stacking up

5/3/22 8:00PM

Getting Lyft behind‍‍

Lyft is the latest company to report less-than-great earnings and get a stern reckoning from investors. Shares in the ride-hailing company are down more than 34% at the time of writing after the platform warned that it was struggling to attract drivers.

The primary appeal of ride-hailing, getting customers a driver in minutes at low prices, falls down pretty hard if riders have to wait 15 or 20 minutes for a driver, which is why Lyft is offering financial incentives to attract new drivers. That is a reasonable strategy, but it's concerning when the company's economics weren't stacking up to begin with. The last 17 quarters have seen Lyft burn through more than $6.8 billion — a staggering amount for a company that has never really recovered fully from the pandemic.

‍Lyft eats?

‍Investors were connecting the dots on Tuesday evening, with Uber shares falling before the company had even reported its own set of results this morning. Uber hasn't completely escaped, with its shares also down about 10%, but thanks to a strong rebound in its mobility business and another solid performance from its food delivery business, Uber claims it can see a path into the black. Without a food delivery business to lean on, and with driver incentives yet to fully roll out, Lyft can't say the same.

Max Knoblauch15h

Paramount reportedly receives $24 billion from Gulf funds to back its Warner Bros. takeover

Three Middle East sovereign wealth funds have agreed to back Paramount’s takeover of Warner Bros. Discovery to the tune of roughly $24 billion, according to Wall Street Journal reporting.

The company’s triumph over Netflix in the bidding war came thanks in part to financial backing from Oracle cofounder Larry Ellison, billionaire father of Paramount CEO David Ellison.

Saudi Arabia’s PIF, which last year led the $55 billion deal to take Electronic Arts private, will provide about $10 billion in the deal. The Qatar Investment Authority and Abu Dhabi’s L’imad Holding Co. is also involved.

According to the WSJ, the funds will not receive voting rights in the combined Paramount-Warner company. Those working on the deal don’t expect the Gulf funds’ involvement to spark any additional regulatory reviews.

Exclusive | Gulf Funds Agree to Back Paramount’s $81 Billion Takeover of Warner

The company’s triumph over Netflix in the bidding war came thanks in part to financial backing from Oracle cofounder Larry Ellison, billionaire father of Paramount CEO David Ellison.

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JetBlue is raising its bag fees as fuel costs squeeze airlines

JetBlue will reportedly hike its bag fees, as the cost of jet fuel continues to climb amid the war in Iran. It’s the latest example of carriers finding ways to push rising costs onto travelers.

Last week, United Airlines CEO Scott Kirby said that if fuel prices remain elevated, fares would need to rise another 20% for his airline to break even this year.

As CNBC reported, when one airline raises fees, others tend to follow.

Earlier this month, JetBlue hiked its first-quarter outlook for operating revenue per seat mile to between 5% and 7%, saying that strong Q1 demand helped “partially offset additional expenses realized from operational disruptions and rising fuel costs.” Now, the carrier appears to be making moves to further boost revenue to offset those costs.

Earlier on Monday, JetBlue rival Alaska Air lowered its Q1 profit forecast. The refining margins for the carrier’s cheapest fuel option — sourced from Singapore and representing about 20% of Alaska’s overall supply — have spiked 400% since February.

JetBlue did not immediately respond to a request for comment.