Biden Administration’s Move Could Not Have Come at a Worse Time for Lyft

Trending News 🌧️

The investment thesis for Lyft ($NASDAQ:LYFT) has now changed, as the Biden Administration’s move has kicked the company when it was already down. For investors, this realistically means that Lyft is no longer a viable investment. The Biden Administration’s move refers to the recent executive order that revoked the previous administration’s decision to label Chinese-owned app WeChat a national security threat. This order gave companies like Lyft a window of opportunity to do business in China, and many were quick to invest in the possibility.

However, with the new administration’s reversal, Lyft has now lost its foothold in the Chinese market. This is a huge blow to the company, which was already struggling to compete with its main rival, Uber. For investors, this means that Lyft is no longer a viable investment. The company is simply too risky at this point, and there are better opportunities out there.

Stock Price

The Biden administration’s move to revoke the waiver that allows California to set its own emissions standards could not have come at a worse time for Lyft. The company is already struggling to turn a profit, and this could make it even harder. On Wednesday, LYFT stock opened at $11.6 and closed at $11.9, a rise of 5.6% from the previous closing price of $11.3. This came after news broke that the Biden administration was revoking the waiver.

Investors seem to be betting that Lyft will be able to weather this storm, but it is going to be tough. The company is already facing stiff competition from Uber, and this could make it even harder to compete.

VI Analysis

A company’s fundamentals reflect its long term potential. The VI app makes analyzing a company’s fundamentals simple. Based on the VI Star Chart, LYFT has a low health score of 2/10 with regard to its cashflows and debt. This indicates that the company is less likely to be able to sustain future operations in times of crisis.

LYFT is classified as a ‘cheetah’, a type of company that achieved high revenue or earnings growth but is considered less stable due to lower profitability. This type of company is usually of interest to growth investors. LYFT is strong in growth, medium in asset, and weak in dividend, profitability.

Summary

The Biden administration’s move to rescind the Trump-era rule that would have allowed gig economy companies to classify their workers as independent contractors rather than employees could not have come at a worse time for Lyft. The company, which is already struggling to turn a profit, would have been hit hard by the change, as it would have been required to provide benefits and other protections to its drivers. The stock price moved up the same day, however, as investors bet that the company would be able to weather the storm.