Rakuten Expects To Lose $947M On Falling Lyft Shares

Japan’s Rakuten has taken a huge loss on Lyft shares, according to Reuters.

The company said it expects to lose 103 billion yen ($947 million) in the latest quarter due to its Lyft investment. Rakuten’s Founder and Chief Executive Hiroshi Mikitani, who sits on Lyft’s board, said shares in the ride-hailing company had “fallen significantly” from July through September.

Rakuten is Lyft’s largest shareholder, with an 11 percent stake. The company is expected to officially announce the loss on Thursday (Nov. 7).

The news adds to an already unrealized 28.4 billion yen loss on Lyft from the previous quarter. Lyft has been competing heavily with rival Uber; both companies, who recently went public, have burned through cash as they struggle to become profitable.

Lyft recently said it was charging full price for its rides for most customers, which would help offset costs and help it become profitable by the last quarter of 2021. The company’s stock has lost about 40 percent of value since its IPO in March.

Lyft recently released its Q3 results, reporting revenue of $955.6 million versus $585 million in the third quarter of 2018, an increase of 63 percent year over year. In addition, Lyft reported 22.3 million “active riders” in Q3, compared to estimates of 22.1 million. Revenue per active rider rose 27 percent year over year to $42.82.

Looking ahead to Q4, Lyft is estimating that its earnings revenue will be between $975 million and $985 million, and revenue is expected to be between 46 percent and 47 percent year over year. For 2019, the company predicts revenue to be between $3.57 billion and $3.58 billion (up from between $3.47 billion and $3.5 billion), and annual revenue growth rate is expected to be approximately 66 percent (up from between 61 percent and 62 percent).

On the conference call with investors, Lyft CEO Logan Green touted the company’s redesigned app. “A few weeks ago, we launched a redesign of our app with the goal of better surfacing all the transportation modes available on our platform: classic rides, shared rides, bikes, scooters and transit,” he said. ”By showcasing all of these modes, we can better match our riders with the right option for their specific trip. Since its rollout, we’ve conducted rigorous testing and we’ve seen increased engagement across rideshare, bikes, scooters and transit.”