Illustration by Elias Stein
That was a quick turn. Investors are veering from mild enthusiasm for ride-hailing to questioning whether the business model makes any sense.
shares on Friday were at $42, down 7% from their initial-public-offering price of $45.
stock at $54 is 25% below its March IPO price of $72.
The problem: the two levers the pair can pull to boost profits—cutting driver payments and raising prices—could hurt growth, wrote Davidson analyst Tom White. This marks a break with the pre-IPO mind-set, when investors focused more on the huge market and less on profitability. Both Uber and Lyft are mired in red ink. Uber lost $1 billion in the first quarter, and the smaller Lyft expects a $1.1 billion loss this year.
“Over the past few days, we’ve noticed significantly more interest/inquiries from investors about the unit economics for ride sharing,” White wrote. “At a high-level, we believe the market is wrestling to understand the interplay between 1) the key levers to achieve profitability in ride-sharing, and 2) whether pulling those levers might restrict the addressable market opportunity.”
Most believe that Uber deserves a premium to Lyft because it’s larger and has global scale, stakes in overseas ride-hailers, and businesses like Uber Eats. White isn’t so sure. Uber revenue growth slowed to 20% in the first quarter from 69% in the March-2018 quarter. Lyft’s sales rose 95% in the first quarter. White’s not totally negative. He has a Buy on Lyft with a $72 price target and a Neutral on Uber with a $53 target.
Canadian markets are closed in observance of Victoria Day.
The Federal Reserve Bank of Chicago releases its National Activity Index for April. Consensus estimates are
for a 0.08 reading, up from March’s -0.15.
hold their annual shareholders meetings in New York and Boston, respectively.
hosts its annual meeting of stockholders. It will be online only.
The three-day UBS Global Healthcare Conference kicks off in New York.
are some of the firms expected to present.
s., and Toll Brothers release quarterly results.
hold their annual shareholders meetings in Newport Beach, Calif., and Chicago, respectively.
The National Association of Realtors reports existing-home sales data for April. Economists forecast a seasonally adjusted annual rate of 5.3 million, up about 2% from March’s 5.2 million sales.
,Lowe’s,Target, and report earnings.
The Federal Open Market Committee releases minutes from its monetary-policy meeting that concluded earlier this month.
holds its annual meeting of stockholders in Seattle.
host their annual shareholders meetings online.
and LPL Financial Holdings host their analyst days in New York.
release quarterly results.
The Census Bureau releases new-home sales data for April. Expectations are for a seasonally adjusted annual rate of 678,000 new single-family home sales, lower than March’s rate of 692,000.
reports its US Composite Purchasing Managers’ Index for May. Consensus estimates are for a 53 reading, roughly even with April’s data.
The Department of Labor reports initial jobless claims for the week ending on May 18. Expectations are for 215,000 claims. The four-week moving average is 225,000.
holds a special shareholder meeting in Wilmington, Del., to approve a reverse stock split. The company is seeking a reverse-stock-split ratio of not less than 2-for-5 and not greater than 1-for-3.
hold their annual meetings of shareholders in New York and Purchase, N.Y., respectively
Whirlpool holds an investor day in New York.
holds a conference call to discuss earnings.
The Census Bureau releases its Durable Goods report for April. New orders for durable goods are seen declining 2% after rising 2.8% in March. Excluding transportation equipment, durable goods orders are expected to rise 0.3%, roughly even with March.
–Robert Teitelman and Dan lam