Evercore’s Mahaney models ‘slow recovery’ for ridesharing stocks
- Mark Mahaney says ridesharing companies have a lot of runway for growth.
- Ridesharing’s value proposition gives more pricing power to Uber & Lyft.
- The regulatory risk has heightened as Lina Khan takes over the FTC.
Evercore ISI’s Mark Mahaney forecasts ridesharing companies like Uber Technologies Inc (NYSE: UBER) to recover slowly from an unprecedented hit from the Coronavirus pandemic. On CNBC’s “Closing Bell”, however, he was optimistic that things were starting to pick up, laying the groundwork for a steady recovery. Mahaney said:
“Close to 36% of people used rideshare in the last year. Of those who used it, only about 26% used it on a weekly basis or more. I think these figures can double in the future. So, there’s a lot of runway for growth in the near term and over the next three to five years. That’s one of the reasons we’re so bullish on Uber.”
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Uber shares are currently about 1% up on the intraday chart. The stock, however, is still down about 3% on a year-to-date basis. At the time of writing, the San Francisco-based ridesharing company is exchanging hands at $49.50 per share that gives it a market cap of $92.52 billion.
Ridesharing’s value proposition gives more pricing power to Uber & Lyft
Mahaney further highlighted on the interview with CNBC that vaccination is starting to ease COVID-19 restrictions across the globe. As commutes, leisure travel, and social events return, demand for ridesharing is likely to only go up.
Commenting on the pricing power of these companies, the expert added:
“Generally, people look at ridesharing as a way to save money, save time, and it’s more convenient than taxis or public transportation. I think this value proposition will give more pricing power to Uber and Lyft in the future.”
Earlier this week, Lyft said drivers were gradually returning to its platform, resulting in reduced wait times.
Regulatory risk has heightened as Lina Khan takes over the FTC
According to Mahaney, as President Biden picked Lina Khan to chair the Federal Trade Commission – a prominent critic of big tech – the regulatory risk is now higher than before. At the very least, he added, “large-scale acquisitions are off the table.”
“If you had to pick one person to run the FTC who has done a lot of detailed work on the perceived need to regulate big tech, it’s Lina Khan. So, this is the ultimate big tech regulator taking over the FTC,” Mahaney said.
Nonetheless, regulation is unlikely to materially weigh on earnings growth, as per the Evercore ISI analyst. In May, Uber reported the smallest quarterly loss since going public.