Investment in Lyft & Uber

Just found this article at ARK’s research which could affect the future value of these companies.

Autonomous Cars Could Compress Ridehailing Valuations
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In response to Lyft’s IPO this week, we examined its potential as transportation goes autonomous in the years ahead. Today, as a percentage of total miles traveled, ridehailing’s penetration is quite low at roughly 1% but, according to our research, it will increase significantly with autonomous vehicles. The biggest beneficiaries will be companies that own the autonomous technology stack. Currently Lyft does not have a credible autonomous strategy.

Today, Lyft’s cut of gross revenues is roughly 27%, up from 18% three years ago, a range that has informed our autonomous taxi network models. Compared to companies like Tesla, GM’s Cruise Automation, and Alphabet’s Waymo, neither Lyft nor Uber is very far along in the development pipeline for autonomous cars.

According to our models, autonomous taxis will submit to natural geographic monopolies, giving first movers an advantage, as highly utilized taxi fleets will collect data and use deep learning to improve driving performance. Without an autonomous commercialization path, Lyft probably will continue to partner with companies like Aptiv that are developing the tech stack, suggesting that its share of the platform fee probably will drop from the mid 20% range for rides today to that for lead generation, probably 5% or less, as Aptiv and others provide more value. In other words, autonomous transportation could put Lyft’s current business model at significant risk.

Even if regulation delays the debut of autonomous taxi platforms, Lyft’s large insurance liabilities could become another showstopper as they scale with the number of trips. Indeed, they could skyrocket if Lyft pursues the scooter business. According to ARK’s research, scooters are 220 times more dangerous than cars!

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