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Comment by data_spy | Hacker News Reader

If that R&D doesn't pan out they essentially will go bankrupt quickly as their R&D spending was 81% of their revenue.

I believe it's common for tech companies to consider all engineering / product payroll as R&D, even if we might consider some eng work as maintenance. In this case a lot of it is stock-base compensation being recognized post IPO. In any case, this isn't just far-out tech stuff like self-driving cars.

Why couldn't they issue bonds and get access to cheap debt like Netflix or Tesla?

Uber issued bonds: https://www.bloomberg.com/news/articles/2018-10-16/uber-is-s...

Rated by Moody's as B3 and by S&P as B-, which is the bottom of "Highly speculative": https://en.wikipedia.org/wiki/Bond_credit_rating#Credit_rati...

For comparison, Uber bonds are one grade lower than Argentinian bonds: https://tradingeconomics.com/argentina/rating

Such credit ain't cheap, especially now that interest rates are no longer zero.

They sold $2billion in 8 year bonds at 8% yield. i think their cost of capital will go down now that their contribution margin is positive (9%)

They can issue bonds. Although they’ll probably pay a much bigger risk premium than Netflix or Tesla. It would likely tank the stock price further though. They’ll need non trivial bonds to merit additional quarters of operations- and in the event of bankruptcy creditors get preference over shareholders

What is included in that R&D category? If it is mainly just maintaining their infrastructure, then there isn't much research happening, and thus nothing to even hope for in terms of breakthroughs.

They're experimenting with new ways to lose money, apparently.

It grew by 10x, but I doubt Lyft's infrastructure or day-to-day engineering costs have grown anywhere near that much. That said, I have no idea what Lyft could spend $600MM on researching.

It includes $500m in stock based compensation this quarter under R&D. IDK if this is a one time thing or what though.

Self-driving cars would be the only thing that makes sense, but it is a longshot and spending 80% of your revenue on that seems nuts.

$600MM/yr @ $200k/yr == ~3000 engineers?

Lyft has 2000 people in their tech org (maybe 1500 engineers)

and the lowest paid engineers at Lyft are probably ~300 total comp.

Probably their Level 5 AV initiatives. Even that domain has long tails that might take more time to iron out than expected. I'm curious if they even have that long of a runway to make it happen.

Their runway is about six quarters. You decide.

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