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Lyft is struggling to prove its business model, as the losses keep mounting and the cash flow continues to be negative. With the current cash balance and (lack of) profitability, the company can continue operating for less than 2 years.

Additional funding will be required, whether it comes in the form of debt or equity, but that doesn’t make their path to profitability any easier.

Lyft also suffers from questionable leadership. Management has been incredibly slow to cut costs in the face of inflation and has sunk money into unnecessary mapping products.

So Lyft is in a tricky spot. It’s unlikely the company can increase its prices because they don’t have pricing power. They also can’t negotiate lower driver fees as they have competition from Uber.
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So the only lever that management has is to lower operating expenses, which is a difficult task since operating expenses would need to halve just to break even. Overall, Lyft is up against the scale of Uber and doesn’t look compelling.

That’s why I give the stock a bearish rating. But these are my personal opinions not financial advice. And I hold no position in Lyft stock.

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