In 2019 two ride-sharing companies - Lyft and Uber - went public. Whats are the risks...

In 2019 two ride-sharing companies - Lyft and Uber - went public. Whats are the risks that these companies are facing? Are these risks similar or different for both companies?

Expert Solution

ANSWER:

Lyft is the ride-hail company which focuses on transportation and has faced unique risks while going public.

Lyft Risks
1. Lyft faces challenges due to its inefficient autonomous vehicle technology and its growth in future.

2. Lyft is using open source software, which leads to exposure to legal risks if the licenses are been interpreted by the courts in some unexpected procedures.
3. The platform is supported and hosted by the ‘Amazon Web services’, implying that it has no control which leads to interruptions, delays, cyber security attacks, natural disasters and various other acts of misconducts.

Uber has horizontal ambitions, which are going beyond rides, going into freight, driverless car technology, food deliver and air taxis. It generates its revenue from three business units, categorized as Personal Mobility, Uber freight and Uber eats.

Uber Risks
1. Uber faced challenges in getting access to the “most popular restaurants”, as such Uber Eats was less appealing to the restaurants and customers.
2. Uber has been associated with instances where the riders has been raped, assaulted, harassed or in some way harmed by the drivers. This has adversely affected the reputation, brand and business of Uber. This has also lead to huge financial loss in terms of paying penalty.
3. Uber generated about 15% from its booking to and from trips to airport. The future prospects and financial health of Uber will suffer if operations in metropolitan areas restrict the links to airport.

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