“Lyft’s active riders and revenue improved in the third quarter from the previous three months as coronavirus shutdowns eased in some cities, but business remained sharply down from a year earlier because of the pandemic,” WSJ writes.
Numbers To Consider:
Even as the pandemic continues to weigh on its business, Lyft hopes to become profitable by the end of next year. Company President John Zimmer said he was encouraged by “early test results for a Covid-19 vaccine and a big regulatory win for the company last week.”
The Bottom Line: Zimmer said a potential Covid-19 vaccine “will further accelerate our recovery.” But Lyft, Uber and other companies built on gig-workers scored a significant victory last week when a California ballot measure passed exempting ride-share and food-delivery companies from reclassifying their drivers as employees with benefits.
Now that California’s political risk is more-comfortably in the rear-view mirror, I’m starting to consider changing my tune on $UBER and $LYFT.
Analyst estimates are generally expecting an almost full recovery in mobility revenue (Rides) in 2021, which might be a little aggressive. Still, even if it is, there is no doubt both companies are growing at 20-30% absent the pandemic.
For fundamentally growth companies, they are trading at pretty attractive multiples on “recovered” financials. $UBER is trading at 6.2x, and $LYFT is trading at 4.3x 2022 estimated gross profit when they are expected to speed past the effects of the pandemic. $UBER is trading at a 2.0x premium to $LYFT because they are diversified with their UberEats business and have larger scale.
I’m anxious about these companies’ long-term dynamics as it relates to autonomous driving, but in the short-to-mid term, the ROIC Big Board is light on “return-from-home” stocks. I am considering adding one or both to the Big Board somewhere to hedge against the sector rotations, so stay tuned for that.