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TECHNEWS · Wednesday, June 19, 2019

Failure and upturn in the stock market listing of Uber and Lyft: Is it the End of the Sharing Economy?

The sharing economy has accustomed us to value things that were often abandoned. Opportunities were born for an extra income and sometimes for  new jobs. The most innovative sector is  transport, where startups, from all over the world, are introducing new business models and technologies: Uber and Lyft in the front row followed by BlaBlaCar, FlixBus, and the most recent micro-mobility startups (Lime, Skip, Bird, Scoot, etc.).

A few months ago, the stock market listing of Lyft and Uber and the collapse of their securities have generated questions from investors and experts around the world on what the future of the sharing economy will be. The steep drop in the share price of Lyft and Uber has people wondering  if we are at the end of an era and if the sharing economy will ever see the maturity of the markets.

Experts opine there is a limited 'competitive advantage' for Uber, which remained too similar to the competitor Lyft. Based on what MarketWatch reports, betting on acquiring the largest market share is not enough for Uber. Both drivers and passengers have both apps (Uber and Lyft) installed and nothing limits the use of one instead of the other.

According to Wall Street experts questioned by CNN Business , among the causes for the tenuous interest on the part of investors, is the excessive rivalry between the two companies in differentiating themselves in a price fight rather than in one another. Questions have been raised if the private valuations of the companies and the initial offer price was too high, especially for Lyft. Even though Uber was more measured in the offer price, the share price did drop below the initial offer price. According to CNN, was investors focused on other IPOs, such as the one related to the vegetable meat - Beyond Meat (BYND), video communication platform - Zoom Video Communications (ZM), or medical devices - ShockWave Medical (SWAV).

A week ago the good news showed up for investors: the value of Uber's shares finally exceeds the price of the stock exchange listing. According to TechCrunch the markets are appreciating Uber's ability to diversify, aiming to become a leader in the mobility sector - Helicopters, means of transporting goods, home deliveries.
A growing number of acquisitions is increasing Uber's position in the micro-mobility sector too. Owning small electric scooters whose maintenance, especially refills, are entrusted to a sharing economy system - anyone can take scooters home to recharge the batteries in exchange for a fee.  In April 2018 Uber had already acquired JUMP Bikes for $200 million. According to TechCrunch Uber is considering to buy Skip,  San Francisco's second electric scooter supplier.

Listening to a CNBC a few days ago, it seems that even the climate around Lyft is changing for the better.

Mobility is certainly one of the sectors that has always attracted innovation and has not been innovated for a long time. So far, we are all in agreement. It remains to be seen if Uber / Lyft's recent events are the first sign of the limits of the 'sharing economy' approach in creating a long-term competitive advantage.

Bruno Iafelice

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