5./15 WEST
Uber Technologies (NYSE:UBER) and Lyft (NASDAQ:LYFT) ended the week on a strong note after reports indicated that Tesla (TSLA) will push off its robotaxi event from August 8 until October.
RBC Capital’s read of the situation is that the October target may turn into a delay for the big robotaxi reveal of three to six months. “The specific delay indicated is hardware manufacturing in this case, which to us is arguably the most trivial part of a potential service vs. other items like getting the technology to actually work, securing regulatory approval, creating a scalable liability solution and compelling the requisite supply and demand to stand up the marketplace,” noted analyst Brad Erickson. Of course, the length of time between showing a robotaxi prototype and having an operational fleet could be quite long.
Erickson and his team continue to view Uber Technologies (UBER) and Lyft (LYFT) as more likely to be beneficiaries in the event of more widespread autonomous vehicle adoption than to be facing an existential risk to their business models. The RBC view is that the lack of a durable first-mover advantage combined with the likelihood of insurmountable execution hurdles for Tesla’s robotaxi business could take the risk overhang off Uber and Lyft (LYFT) at some point.
Ride-sharing update: Recent data has shown that Uber’s (UBER) ongoing multipronged product approach to its business model with more types of rides (shared, taxi, reserve, X, etc.) and lower priced options has continued to help with adoption and frequency growth. Meanwhile, Lyft (LYFT) is coming off its first-ever investor day event, during which management provided a three-year financial outlook and highlighted the company’s focus on product innovation, partnership growth, operational excellence, and Lyft Media.
Shares of Uber (UBER) have gained 1.1% over the last six weeks, while Lyft (LYFT) has shed 15.9%. Both companies are due to report Q2 earnings in a few weeks. During Q1, Uber (UBER) saw gross bookings grow 20% year-over-year, while Lyft (LYFT) recorded a 21% increase in gross bookings. One of the key points to watch during the Uber (UBER) earnings call will be the commentary on how the partnerships with Instacart (CART) and Aurora Innovation (AUR) are progressing.