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Is 2020 The Year Of Uber? 2 Pros Discuss Key Issues

Is 2020 The Year Of Uber? 2 Pros Discuss Key Issues

Ride-hailing companies could fare well in 2020 but it may be a mistake to assume Uber Technologies Inc (NYSE: UBER) and Lyft Inc (NASDAQ: LYFT) offer similar investment profiles, according to Canaccord Genuity's Michael Graham.

Uber Vs. Lyft

Graham said Monday on CNBC's "Squawk Box" he likes both Uber and Lyft although there are some key differences between the two companies. Lyft has a "more contained" investment profile and could grow faster than Uber and achieve profitability on time. Uber is focused on the global market and will need to oversee larger investments.

Investors willing to hold a ride hailing stock for three to five years may prefer Uber as its global footprint could translate to better scale, D.A. Davidson's Tom White also said on "Squawk Box." However, the near-term visibility is "a lot more limited" compared to Lyft.

California Law

California's new state law dictates ride hailing and other "gig economy" companies need to treat workers as employees. The law is being fought through legal channels and the most likely outcome would be a middle ground compromise, White said. California doesn't want to be known as the state which imposes "very punitive" actions on the gig economy market.

The financial impact on Uber, Lyft, and other companies with similar profiles is "a couple thousand" dollars per driver, per year, Graham said. The bigger issue is if other states will follow California's suit.

Related Links

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Uber And Lyft Fought The Law And Won In NYC


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