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Long-Term Virus Impact: Good For Automakers, Bad For Uber And Lyft

Mar. 06, 2020 5:52 PM ETLyft, Inc. (LYFT), UBERF, STLA, HMC, HNDAF, NSANF, NSANY, TM, TOYOF, GM33 Comments
Anton Wahlman profile picture
Anton Wahlman


  • Looking beyond the immediate horizon of this week and this month, there are two changes in behavior that could impact the automotive industry meaningfully.
  • For people who don't relocate permanently as a result of new "work from home" directives, they may abandon public transport and taxis such as Lyft and Uber.
  • Why? Because driving your own car means personal safety, and the ability to be on work calls, including conference calls, in private.
  • Some people may seize this moment to move away from major metros, into the American heartland in order to save money and enjoy higher quality of life.
  • For the people who move to a more rural area, they will definitely not be using Uber or Lyft, but rather own a regular car, more likely an SUV or pickup truck.
  • Looking for a helping hand in the market? Members of Auto/Mobility Investors get exclusive ideas and guidance to navigate any climate. Get started today »

NOTE: A version of this article was first published on or about March 6, 2020, on my Seeking Alpha Marketplace site.

I need not remind you how unique and unprecedented the current virus situation is, in terms of the ways in which it is, and will be, impacting all areas of society. In the last few days, I have been getting many questions as to how it could impact the automotive industry and transportation more broadly.

This is unchartered territory, and speculation is therefore necessary. Just like it would have made sense to think outside the box about this issue on January 23 from an investor's perspective, it's equally clear that such "outside the box" thinking remains as critical now on March 6. We may still be in the earliest of stages of how the investment gyrations will play out -- temporary as well as permanent ones -- so let's get creative.

With those caveats out of the way, I am about to describe one scenario as to how this will impact automotive sales -- perhaps not this quarter or next, but over the longer term. I am thinking about a generational shift in transportation mindset, that could be the unexpected result of a virus epidemic.

For a few years, we have heard how there will be a shift to collective transport -- trains (subways) and buses -- as well as lower-cost taxis (such as Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT)). The idea here was that people did not care about owning the asset that is a personal vehicle. The sharing economy has reached all sorts of areas, from homes (AirBnB) to women's clothing (Rent The Runway) and even funeral caskets.

The benefit with this rental/sharing economy is that it's simply cheaper. By utilizing an asset more, allowing people to use it relay-style, cost

This article was written by

Anton Wahlman profile picture
I am a former sell-side analyst -- UBS 1996-2002, Needham 2002-2006 and ThinkEquity 2006-2008. These days I review automobiles and other technology products, as well as analyze the automotive and technology industries, and coming up with long/short ideas. I also continue to write (less frequently) on macroeconomics and politics.

Analyst’s Disclosure: I am/we are short TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

At the time of submitting this article for publication, the author was short TSLA. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by most major automakers.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (33)

mane profile picture
11 Mar. 2020
This hits home on the hit this stock has taken, it is also fascinating to see that the leap options are priced in for an incredible spike.
LoloE profile picture
Easy to disagree.
As a matter of fact, there is increased demand for Uber and Lyft services due to avoidance of public transportation.
Airport trips have dramatically decreased.
This misconception makes oversold Uber and Lyft extremely attractive, especially Lyft since the US has only been mildly affected by the virus.
Car sales in China in February were down 80%!!! 800,000 cars didn't get sold that ordinarily would have been sold in February alone. That is 1% of annual worldwide vehicle sales! Do you think anyone in Italy is buying a new car??? Visit Tomtom Beijing to check out weekend traffic... there is none! CV 19 is terrible for the car business. The good news is that the supply chain breaks are no longer the problem. Problem is worldwide demand tumbling, global recession, so supply is not an issue.
Trader of Orange profile picture
With every crisis, we assume people will stop doing what they have been doing for ages. Using taxis, boarding planes, taking cruises, buying homes etc. And you know what? They don't.
You lost me at a car being an asset.
We are going from a 3 car family to a one car family. When you figure the cost of a car, Ins, license, taxes, gas v. Uber or lift it’s not close. Besides my millennials children don’t drive.
ContyC profile picture
@dinoperson “Besides my millennials children don’t drive.”

It is hard to understand why would people give up so easily on the ability to independently move by using a car, and become dependent on others to provide transportation.
seriously, no one take taxi and public transportation in Asia.

rather, everyone use their own cars.

Check news.
vaccine ready for emergency usage in april !!!!!!!

Wall Street Refugee profile picture
As is common, Anton, your thinking is fresh, original, and thought-provoking. Your thinking through the implications of personal safety - and whether this prompts longer term changes "trialed" by the virus - is helpful. Indeed, I recall an aphorism that the unnecessarily paranoid survive, while the unnecessarily bold do not. Further, I believe your consideration of personal safety may pair well with concern for personal privacy. As you wrote perhaps 15 years ago, we indeed have cameras in effectively all public spaces, and in many private spaces. As cameras become commonplace in public transit as well as in taxi / Lyft / Uber vehicles (traditional and ultimately self-driving), the fears spread by rapidly-standardizing facial recognition technologies may exacerbate the migration back to personal vehicles, potentially including rental scooter / bike offerings.

Let me offer a remark for those readers - and commenters - who knock your regular "thought pieces". Folks, this is what Anton does. If you are looking for raw quantitative analyses, there are many articles to choose between. However, if you want to understand the potential impact of longer-range industry-changing factors, you'll be hard pressed to find an earlier or better-reasoned analyst than Anton.
Thanks Anton
Finally, it's time to buy uber, the best indicator appeared, lol.
cparmerlee profile picture
I appreciate this article. I think the implications go way beyond the auto industry and transportation. It will be interesting to see if the COVID-19 experience causes permanent lifestyle changes or if it just passes and is forgotten in a few months -- like Ebola, SARS, MERS and all the others.

I do think there is a possibility that COVID-19 will have a more lasting impact. We have already seen lots of conventions cancelled, including the big one SXSW just yesterday. That has never happened before.

The only thing that is clear to me is that airlines are going to be hit really hard. I would not want to hold are Boeing at this stage.

If this persists, there would be all sorts of implications on sporting events, churches, anything that requires people to be together.

The impact on senior care could be far-reaching, as senior living facilities are the most vulnerable to these viruses.
Very similar to SARS. 80% genetically equivalent. It's already less deadly than those percentage-wise. No point being overly pessimistic
OverTheHorizon profile picture
Excellent article n commentary. I too am a follower of trends n demographics n I think you have nicely bundled them into a clear concise scenario. I particularly like your thoughts on potential migration to the Midwest reversing decades of urban growth (and problems). Well done.
Many have no car in cities
Value Digger profile picture
UBER's expenses will go up in the next quarters, which is another reason why UBER will continue to record massive losses in the next quarters.

Specifically, UBER just announced that it will compensate drivers and delivery people who are diagnosed with Coronavirus or placed under quarantine for up to 14 days:


“This has already begun in some markets and we are working to implement mechanisms to do this worldwide. We believe this is the right thing to do,” Andrew Macdonald, senior vice president of rides and platform at UBER, said in a statement.
OverTheHorizon profile picture
How many drivers are undiagnosed? Like Dirty Harry said “you fellin lucky?”
ds1986 profile picture
wow a company doing the right thing for a de minimus cost.. how awful.
ds1986 profile picture
This could cost uber over a thousand dollars! Thanks for pointing out how dire the situation is.
How are these guys articles allowed to be published? @Seeking Alpha
Make sure to get an electric car otherwise you‘ll fetch the virus at the pump.
You had time to waste to write so much about a bunch of wild guesses.
This fits more as a fiction than an analysis and i am not sure it’d eveb be a good fiction.
Your post is cosmic vacuum!
BIG$$$ profile picture
Shorts are right on time, buy a car and stop using Uber 😅
I just wasted time in my life reading this.....................
I stopped reading at "owning the asset that is the automobile." ROTFLMFAO
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