Lyft Shows the Cost of Being (a Distant) Second
The formula for running a successful business generally isn't a complicated one. As long as your revenue exceeds your costs, you're turning a profit. That's easier said than done, though. Just ask the folks running ride-hailing outfit Lyft (NASDAQ: LYFT).
Although its customers love Lyft's service and the company still has some hopeful shareholders, Lyft's balance sheet remains in the red, with no end in sight. It's not too soon for investors to start asking tougher questions about the viability and longevity of its business model, particularly as long as much-bigger rival Uber Technologies (NYSE: UBER) remains in the picture.
As the old adage goes, a picture is worth a thousand words. Take a look at the chart below. Lyft has successfully scaled up its reach and revenue. But, its cost of revenue, selling and administrative expenses, and spending on research and development has grown just as much, keeping the company in the red with the exception of a brief reprieve in the latter half of 2021. Last quarter's expenses exceeded revenue by the most since late 2020, when we were in the throes of the COVID-19 pandemic. Note the big surge in its cost of revenue (or cost of goods sold). This is at least partially linked to greater spending on driver recruitment and compensation, though gas prices also impact this expense.
Source Fool.com
