Uber lost $5.2 billion dollars in three months. Lyft lost less, but still burned through hundreds of millions of dollars.
Now that both companies have shareholders after IPOing this year, there’s added urgency to show promise, or at least lose fewer billions of dollars. The lucky recipients of that urgency appear to be… you, the rider.
Lyft came right and said they were raising prices. The company’s chief financial officer Brian Roberts admitted that they’ve been hitting riders with “modest price adjustments that went live toward the end of June.”
“We began to adjust prices on select routes and in select cities based on costs and demand elasticities,” Roberts said on an earnings call, though he did not disclose which cities, nor the size of the price increase.
When competitor Uber said the next day that they’d just posted a $5.2 billion loss for the quarter, one investor asked Uber CEO Dara Khosrowshahi if it wasn’t time for them to raise prices too.
“We’re constantly testing and learning in terms of pricing,” Khosrowshahi said.
It’s no accident that both Uber and Lyft are talking about raising their prices right now; neither’s stock has performed well since their highly-touted IPOs this spring. Lyft stock has lost more than 20 percent of its value since going public, while Uber’s stock has hovered close to it’s all time low recently.
Uber has also been cutting costs in other areas. At the end of July, Uber laid off 400 people in its marketing department and recently confirmed a Yahoo Finance report that it has a hiring freeze in place on their engineering team. The price hikes aren’t confined to ridesharing, either. JUMP Bikes, owned by Uber, substantially hiked their prices just last month.
Khosrowshahi said that while Uber lost a great deal of money, there were numbers for investors to be optimistic about, like an increase in gross bookings. At some point those numbers will have to bear fruit, however, or the ridesharing giants could go the way of MoviePass: lighting venture capital dollars on fire to the benefit and delight of regular people everywhere before becoming a shadow of its former self.