LYFT

Analysis of Lyft share price

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If you are interested in the Lyft group’s shares and you wish to start investing in this asset online we suggest you read this dedicated article relating to this asset that will guide you in your analyses of this company’s share price. You will notably find practical information here about the Lyft Company with details on its activities, its major competitor and its most influential partnerships as well as useful data for your fundamental analyses such as a comparison of this company’s strengths and weaknesses and the news and events you should prioritise when monitoring new data.

Elements that can influence the price of this asset:

Analysis N°1

Of course, we would recommend you monitor the different developments of the Lyft Company in the sector of autonomous and robotic vehicles during tests and on the market launch of this type of vehicle which should take place over the next few years.

Analysis N°2

All forthcoming strategic partnerships and alliances that Lyft implements with large companies will of course also have an impact on this company’s stock market share price. You should therefore attentively follow this type of announcement.

Analysis N°3

Of course, we also recommend you follow the international expansion strategy of the Lyft Group and the implementation of its services in other countries around the world which will undoubtedly enable it to increase its turnover and profitability.

Analysis N°4

We also urge you to keep an eye on Uber, Lyft’s major competitor, and this company’s developments and events that could have an impact, either positive or negative, on the price of this asset. 

Analysis N°5

Finally it is also recommended to monitor the laws and regulations in force in the sectors where Lyft exercises its activities as well as any possible notable changes.

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General presentation of Lyft

Firstly, before continuing with our analysis of the Lyft share price we offer a brief introduction and presentation of the Lyft Company and its principal activities. You will thereby be more able to understand its current economical environment and the major challenges facing this company.

Lyft is an American company that is specialised in the communications between the users and drivers that offer transport services. It is above all known at present for being the only competitor of the Uber Group as the services it offers are very similar.

Lyft’s success story started in the beginning of 2016 when it launched a funding drive for the total sum of a billion dollars. Half of these funds came from an investment from the General Motors Group notably for research in the autonomous automobile sector.

The following year, in 2017, the Lyft Company raised another 600 million dollars in capital which enabled it to start competing with its major rival, which up to then was the only player in this sector, the Uber Company. In the same year the company became associated with the American giant Walt Disney, more precisely Disney World, for the implementation of an on demand transport system that would be called Minnie Van.

The IPO of the Lyft Company took place in 2019, on the 29th March to be precise, on the American NASDAQ stock market. During the first trading session the share price rose by over 9% despite having made a loss of nearly 911 million dollars during the previous year 2018.

Analysis of Lyft share price
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The major competitors of Lyft

As we summarised briefly in our presentation of the Lyft Company the activity sector of this company is extremely specific and only includes a single serious competitor, the Uber Group which was the pioneer of this type of communications system between drivers and individual users. It is therefore important when studying this asset to also complete a comprehensive study of this competitor in order to better anticipate possible future movements in the share price related to Uber’s financial or economic announcements. Here therefore is some useful information relating to this competitor.

Uber

The Uber Company was previously known as UberCab. It is an American company in the technological sector that develops and provides mobile applications that enable communications between the users and the drivers that offer transport services. The headquarters of this company is actually at San Francisco in California. This group was valued at the amount of over 50 billion dollars in 2015 and operates its applications in over 310 towns and cities worldwide. Its founders are Garett Camp, Oscar Salazar and Travis Kalanick. However, after a promising beginning Uber experienced certain difficulties given that it chose to promote and organise a regular service activity as an occasional activity. The company therefore ran into various controversies relating to its practices and was notably accused of disloyal competition and undeclared work practices from transport companies such as professional taxi companies as well as public authorities.  The latter requested that Uber respect the social, fiscal and administrative regulations currently in place. These setbacks rapidly led to a simple ban of Uber services in certain towns and cities worldwide, even countries.  However, Uber remains the leader in this activity sector notably due to a well thought out and effective expansion policy that has enabled it to develop over time. In fact, the Uber name has actually resulted in the creation of a new term, ‘uberisation’, which extends this concept to cover other economical sectors.


The major partners of Lyft

Since its recent creation Lyft has lost little time in promoting its promising company image for development, notably by becoming associated with various high end partners to boost its growth. It is therefore extremely important to monitor this type of strategic alliance as announcements of this type generally have a highly influential impact on the company’s share price on the stock markets. To ensure you do not overlook the influence of this type of partnership we offer you the opportunity to learn about some of the more recent instances that have strongly influenced the investors.

Alphabet

The first partnership that we will examine here is the one that Lyft implemented with the Alphabet Group, the parent company of Google, and more precisely with its investment fund named CapitalG. These funds in fact enabled a billion dollars fund raising drive for Lyft and brought this company’s total stock market capital to 11 billion dollars. Within the framework of this agreement David Lawee, one of the CapitalG partners, joined the board of directors of the Lyft Company. The objective of this partnership was in accordance with the Lyft Company strategy relating to the promising sector of autonomous vehicles. In fact, while Lyft was thus benefiting from this fund raising campaign its competitor Uber was experiencing a succession of setbacks. It should be noted that Lyft had made great efforts to tempt investors with its well thought out autonomous vehicles strategy. As we shall examine in detail later on the group had in fact implemented another partnership the same year with the Ford group and, as announced in our presentation on this company it had also benefitted from a strategic partnership with General Motors in the past. But this was not the first partnership entered into by Lyft with Alphabet as an alliance had already been negotiated with the subsidiary Waymo, specialised in the autonomous vehicles sector for this group. However Lyft was not the first choice for Google which had in fact invested in Lyft’s competitor Uber back in 2013. But given that Waymo and Uber were in litigation relating to intellectual property fraud it was clear that the American giant was going to ally itself with the Uber’s competitor with which it had no litigation outstanding.

Ford

Previously, but still in 2017, the Lyft Group signed a partnership with the American automobile manufacturer Ford. The primary objective of this partnership was to implement a service featuring a float of robotic vehicles before 2021. But before achieving this objective the two companies would work together on the development of software enabling Ford vehicles to communicate directly with Lyft’s mobile applications. It should be remembered that the General Motors Group, of which Ford is part, already owns 9% of the Lyft Company’s capital so this is not the first collaboration between the two companies.  When the Ford brand autonomous vehicles that integrate the Argo AI artificial intelligence software for level 4 robotic driving are finally functional they will be connected to the Lyft network. It should however be noted that these vehicles will not be initially available to private individuals as they will first need to pass security tests and on-road trials.

Magna International

Finally, in 2018 another advantageous partnership was inaugurated by Lyft, this time with a Canadian equipment supplier company, Magna International.  This new partnership has the principal objective of developing autonomous driving systems.  It is therefore a long term partnership with a programme financed by both companies that should continue over several years to jointly produce new technologies. Still pertaining to this agreement, the Magna International Company should be investing over 200 million dollars in the Lyft Company.

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The factors in favour of a rise in the Lyft share price:

First of all, the Lyft application currently in use offers its services at very wide opening hours and until 3 a.m., which enables it to target a very wide customer base, particularly in big cities.

The security and reliability of Lyft is also one of the advantages of this company. Indeed, Lyft carefully inspects each of the vehicles used by its drivers and of course checks the background of each of these drivers.

Lyft's modern service even allows customers to charge their mobile phones in the vehicles and listen to their own music.

Of course, like Uber, Lyft's business model allows the company to maximize profits while reducing costs. In particular, the fact that the vehicles used are owned by the drivers is an interesting lever for growth and profitability. It also allows the company to offer its users much lower rates than those of traditional transport companies.

But Lyft also relies on certain details to stand out from its competitor. For example, while Uber's fleets pass unnoticed in traffic, Lyft drivers' vehicles are easily identifiable by the brand logo that is affixed to them.

Of course, Lyft's numerous partnerships with renowned companies can be seen as an undeniable asset for its growth. The fact that large groups such as Google or General Motors are interested in this company is indeed a sign of confidence for investors.

The low number of competitors in this sector of activity can also be considered an advantage for Lyft with high barriers to entry. Indeed, it should be recalled that Lyft's only current opponent is Uber.

Finally, the Lyft group's strong investments in the autonomous vehicle sector, which, according to specialists, represents a promising sector for the future in the field of urban passenger transport, are also to be welcomed. Thanks to its developments and discoveries, Lyft can wage a real technological war against its competitor Uber.

The factors in favour of a drop in the Lyft share price:

Firstly, one can regret the group's lack of profits from its creation to the present day, notably because of the low profitability and the low level of return on the price of travel, but also because of the group's numerous investments in research and development. Stock market investors could indeed be held back by disappointing results, even if future results should prove more promising.

Lyft's direct competitor, Uber, also remains a major threat to the group, as it was the first on the market and has many more drivers than Lyft. Despite the setbacks suffered by Uber, it remains the leader in its sector and is present in many more countries around the world.

Finally, the investments made by Lyft in the field of autonomous vehicles are likely to encounter some obstacles in the course of development. Indeed, the safety and reliability of robotic vehicles is at the heart of many people's concerns and Lyft will therefore have to prove itself and be able to reassure the market before reaping the benefits of this new activity.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions.
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