Lyft is ploughing through cash as it spends to compete with Uber, but it’s reportedly promised investors it won’t go too hog wild with its spending.
According to Bloomberg, the ride-hailing company pledged to investors that it would cap its losses at $50 million a month, or $600 million a year.
The losses are driven by subsidies it needs to entice both customers and drivers to try Lyft instead of Uber. It’s paying for marketing stunts too, like having Danica Patrick drive for Lyft for a day or being the official partner for SXSW.
Lyft is only spending the money in the US, the only market in which it operates.
Uber, in contrast, claims it’s profitable in the US, making on average 19 cents a ride. But it’s reportedly losing at least $1 billion in China this year to compete with Didi Kuaidi, which recently partnered with Lyft. In India, it pledged another $1 billion investment to compete with local ride-hailing company Ola, another partner of Lyft.
Lyft did not respond to request for comment.