Hi there everyone,
Uber and Lyft are paired together now in the minds of US and Canadian consumers. Lyft is only present in US/Canada, whereas Uber is worldwide.
Lyft is growing into Uber's marketshare in their shared region, and there's no reason that won't continue. Lyft is generally slightly cheaper on price for rides now, and I propose that over time it will tend to shift toward's 50/50 split for revenues in their shared markets. They are doing a good job with Customer Service, etc.
Lyft is cheap on a valuation basis. If we value by revenue, Uber is trading 3.5X higher valuation than Lyft. Is this premium really warranted? I would aruge that Uber Eats is a lower margin business, further excacerbating the ridiculous gap. Either Uber must go down, or Lyft must go up, so a classic Short Uber Buy Lyft strategy might even make sense. Lyft's 12 month forward p/e on Yahoo Finance is 21.28 vs. 53.19 for Uber.
Given that Lyft is is down from $20 to $12.34 in 6 months on positive earnings, is growing faster than Uber in North America, and is valued about 50-75% cheaper than Uber on a valuation basis, I do think now is the time to invest in Lyft for a swing trade at a minimum, or even a longer term, 6-24 month horizon. I've bought Lyft stock, $14 Aug calls, $15 January calls, and $17/$27 call spreads for June 25 and Jan 26.
I haven't bought puts on Uber yet, but am considering. Given that they aren't a perfect match (Uber has foreign and Eats), I may not pull trigger on the puts…
Do your own due diligence, but as for me I definitely like the stock.
Posted by Jasonphos
4 Comments
Just so you know, I am invested in Lyft for similar valuation reasons. But market is what it is, and it’s pricing in Uber as the 800-lb gorilla who can spend its way to obtain robotaxi. Both stocks traded down whenever Elon talked about robotaxi. Uber‘s stock price however is being punished less than Lyft probably for the reason I stated above. Lyft is being priced as if its long-term survival is in question.
Past experience has taught that valuation is a poor timing tool when sentiment is clearly driving the price. This current market is largely about telling good stories to investors.
I hope to see Lyft on this earning call to start paying lip service to robotaxi and that they’re aware they need to consider robotaxi in a their future.
I have Lyft Pink though my credit card and get extra points when using it so I try to every time I can but in general Lyft totally sucks now. It used to be almost interchangeable in price and availability but I hardly even use it now because it’s almost always the same price or higher than Uber and way less availability. I’ve asked drivers everywhere I go and apparently they’ve lowered the cut they give them so a lot have gone from doing both Uber and Lyft to only Uber now. Don’t know about the stock price but the product itself has been seriously declining over the past year or two.
Missed such an obvious opportunity to say ‘Lyft primed for a lift’, puts
As a consumer, I found uber’s rewards system to be easier to understand than Lyft so I’m almost exclusively using Uber now. Before caring about rewards I would use Lyft more.