Lyft Stock: P/E Ratio of 2 and EV/FCF of 4 – Just an Optical Illusion!?
Why Lyft continues to be viewed with skepticism despite its solid financial results and low valuation - and why this could present an opportunity
Due to popular demand, I am offering my content in both English and German (DE). If you would prefer to read this article in German, click here. If you would like to receive the German articles by email in the future, you can change the settings (notifications) in your Substack account here.
About six months ago, I wrote a post comparing Uber and Lyft (LYFT 0.00%↑):
At the time, I deliberately framed my argument to challenge the consensus:
The era of autonomous mobility will not produce just one winner.
Tesla fans keep repeating the “The Winner Takes It All” narrative like a mantra, but this won’t be the case. There will be many providers of autonomous vehicles (AVs), which require demand, utilization, and operational management.
This is precisely why Uber and Lyft are so exciting as the leading demand-aggregation platforms. Uber is the undisputed market leader and has become a true global cash cow. Lyft is the smaller, more focused player with a significantly lower valuation and, consequently, even more potential.
So far, the market hasn’t rewarded my thesis. In fact, quite the opposite has happened: Since I published that article, Lyft’s stock has fallen by about 30%. This is despite the fact that valuation metrics displayed by most stock screener tools, such as StocksGuide, now look extremely attractive.
At first glance, this seems disappointing. Upon closer inspection, however, this is exactly the kind of situation that interests me. Have the company’s fundamentals deteriorated, making the stock a “value trap”? Or is just the market sentiment working against my investment thesis?
