Earlier this month, Lyft crossed a major milestone when it completed its 1 billionth trip. It took the company six years to reach that goal, which is around the same amount of time it took Uber to reach a billion rides. But unlike Uber, Lyft only operates in cities in the US and Canada, so each of its 1 billion trips has the distinction of being homegrown.
Even though Lyft sees its future as a more multimodal, sustainable transportation company that supports biking, scooters, transit equity, and safer streets, cars are still its core business — specifically gas-burning cars. As such, the ride-hail company is celebrating the milestone by offering a free tank of gas to 3,500 drivers selected randomly from across the country.
But can Lyft accelerate this rate of growth? It took Uber six months after it reached 1 billion trips to double that number and then less than 12 months for it to get to 5 billion rides. Of course, these numbers are largely meaningless compared to more tangible metrics like gross bookings, revenue, and profit. And those numbers, well, they don’t look too promising.
According to a recent report in The Information, the once-hot ride-hailing business is in a bit of a slump.
Revenue growth rates for the U.S. ride-hailing businesses of Uber and Lyft slowed this summer to their lowest point in years, according to research firm Second Measure, which tracks credit and debit card transactions. Growth in the number of rides also slowed, particularly at Lyft, possibly reflecting price increases instituted by the No. 2 ride-hailing firm.
In other words, the slowdown in revenue is especially worrisome for Lyft, which has a smaller market share than Uber and therefore thinner margins. Other third-party data suggests that Lyft’s growth rate will flatline compared to Uber. Data from App Annie, a mobile app tracking firm, shows that in terms of app downloads per month, Lyft has had a 40 percent market share compared to Uber’s 60 percent for the past year or so. Without closing the market share gap, Lyft won’t be able to generate as much in profit.
With all this in mind, Lyft is preparing to go public, hoping to beat Uber to the punch. The company hired IPO adviser Class V Group LLC to work closely with management as they embark on the process, according to the LA Times. Lyft also plans to begin taking pitches from banks as soon as September, targeting March or April next year for the listing.
So while “1 billion trips” is certainly a nice, big number to celebrate, the road ahead is full of speed bumps. Nonetheless, Lyft co-founder and president John Zimmer used the opportunity to celebrate the company’s ability to forge connections between strangers.
“Every single day, millions of people connect in Lyft rides across the country helping to demonstrate that people from all backgrounds, neighborhoods, and walks of life can come together — even if just for a short trip,” Zimmer said in a statement. “We are incredibly motivated knowing that each individual ride can make a difference in people’s lives, and appreciate the community of drivers and passengers who made this possible.”