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Lyft is not pretty in pink
The struggling rideshare company hit a new all-time low Monday. Could it be a takeover target?
Lyft investors are in need of a lift. The ridesharing company’s stock hit a new all-time low Monday, briefly trading below $8 a share. Lyft’s stock has plunged more than 25% this year while rival Uber has surged 60%.
Lyft has not been consistently profitable, most recently losing money in the first quarter. Analysts are forecasting another three months of red (or shall I say pink?) ink in the second quarter too. Wall Street is also predicting revenue growth of just 4% for the full year compared to estimates of an 18% increase in sales at Uber. So can Lyft get back on track?
It’s going to be tough. Lyft announced earlier this month that CFO Elaine Paul would be stepping down. She only joined as chief financial officer in early 2022. That’s not a good sign. Erin Brewer, a former Schwab exec, is taking over as Lyft CFO.
New Lyft CEO David Risher, who just joined in April, recently told Bloomberg that he’d be “open to offers” for a takeover but that Lyft isn’t currently on the shopping block.
Could Lyft be a tantalizing takeover target? Perhaps. Given Uber’s success branching out beyond ridesharing thanks to Uber Eats and its Postmates deal in 2020, Lyft could be a good fit for Postmates/Uber Eats competitor Doordash. Doordash, which went public in late 2020, has a market valuation of about $25 billion. So it could probably absorb Lyft, currently worth just $3 billion, reasonably easily. Doordash might also be interested in the fact that Lyft owns Motivate, the company that runs the popular Citi Bike rental service in New York City as well as programs in other cities.
Still, it’s not clear if another company would want to buy Lyft given its troubles and perennial second fiddle status to Uber. After all, the company was rumored to be in the acquisition sights of GM, Ford, Apple and Google owner Alphabet a few years ago before it went public. It wound up going public instead. There were even talks that Lyft was possibly going to get bought by Uber. That clearly didn’t happen either.
Tesla could be another wildcard, I guess. But doesn’t Elon Musk already have enough on his plate? Heck, forget about plate. The man has a bona fide seven course meal. Adding Lyft to an empire that also includes SpaceX, Twitter, The Boring Company and Neuralink might be overly ambitious even for Musk. So Lyft might have to remain on its own. Good luck.