2 companies in 2 minutes: $UBER and $LYFT
Uber Technologies, Inc.
two of the most popular ride hailing companies also happen to record massive losses to the tune of hundreds of millions, if not in the billions, setting the stage for more fundamental risk as evidenced by negative PEs. In my opinion, $UBER and $LYFT are also exposed to additional systemic risk due to the global pandemic, where ride fees have grappled with city, state, and country lockdowns, temporarily affecting the cores of their business.
Outside of the the pandemic, $UBER and $LYFT are also involved in lawsuits with the state of California, as their business models are fraught over and scrutinized for classifying drivers as contractors, rather than employees.
Earlier this year, $UBER announced acquisition of Postmates food delivery service to increase their food delivery service market share by coupling their acquisition with Uber Eats, in a bid to trade the loss of ride fees with additional food delivery fees — a price tag totaling $2.65 billion in an all-stock deal.
$LYFT is seeing a much more severe decline in market capitalization than the likes of $UBER, and is noticeably late to the food delivery service party, opting for a partnership with $GRUB Grubhub Inc., rather than rolling out their own competition or by virtue of acquisition.
It’s interesting to note, before $UBER bought Postmates, $UBER had made an offer to buy $GRUB in an all-stock takeover, but the deal eventually failed.
$LYFT has dropped more than $10 billion in valuation as a result of global pandemic lows, without tracing $UBER for any kind of notable recovery — instead, creating more or less a wait and see approach to either witnessing a $LYFT recovery, or a potential buyout at 3X the valuation of Postmates, contrasting $UBERs modest spectacle of bullish reversal despite increased market volatility affecting both companies.