The business models of UBER Technologies and LYFT could be completely unsound and unviable, as the cost structures of these two companies clearly develop as high production and capital costs, compared to the output produced by driver-partners. Production costs in proportion to labour output are 1:1 if not 2:1, both companies have been since before the IPOs lossmaking businesses, as proof that their business models are flawed. The cost of debt financing, long and short term debt financing matched with lease and production costs financing are double the labour output of drivers, in the longer term these businesses are unprofitable and more of a burden costs for driver-partners, while also operating on loss-making business models, as in fact either Uber Technologies and LYFT do not produce any material goods, but only provide technology services based on consumer demand, that it’s highly volatile and in competitive markets.
In the longer term, UBER Technologies and LYFT balance sheet exposures to debt financing could become clearly unsustainable. Equity issuance utilized to financial engineering for EPS and improving balance sheets, could not be sufficient as the business model of both UBER and LYFT are unsound and clearly not profitable.