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Believe it or not, Uber and Lyft’s Are on a Wild Ride Despite COVID-19!

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Uber Stock Market Today

Ride hailing services Uber and Lyft entered 2020 gunning for profits, but the spread of coronavirus in the U.S. is feared to threaten those plans as companies throughout the globe are facing unforeseen challenges. Due to governments imposing self-quarantine to Americans and Europeans  in an effort to contain the spread, the demand for ride hailing is also expected to plunge. But the outbreak is also believed to highlight important distinctions between the two fierce competitors, moreover the business model differences between Uber (NYSE:UBER) and Lyft (NYSE:LYFT) and reveal which one is more resilient. Yet, despite the initial drop and quite a dramatic one as Uber shares fell about 50% this year and Lyft 65%, the end of last week ended up being a wild ride as Uber’s shares rose 38 percent last week and Lyft followed with 29 percent.  And it’s all because of Uber’s analyst call where the CEO confidently stated that the company has enough cash to get through pretty much anything that 2020 might bring. Confident indeed as the pandemic will also amplify their weak spots- and we already know some of them.

Markets crashing

As the outbreak wreaks havoc on financial markets, and threatens to upend the economy, even the Dow Jones Industrial Average plummeted in its worst single-day crash since 1987. Neither of the two ride hailing companies issued a revision of their financials when all this started. When the pandemic was ‘only’ beginning to be in the air, it seemed like people were shifting to Lyft or Uber from other modes. But things went downhill pretty fast and that quickly stopped being the case, especially since a significant chunk of their business belongs to airport rides with flights being cancelled and airports in Europe closed. As for Uber, an estimated 15% of trips are attributed to airport rides. If plummeting demand for flights serves as a rough indicator, airport trips should see a corresponding dramatic drop in demand. And that is immense as United Airlines Holdings Inc (NASDAQ:UAL), JetBlue Airways Corporation (NASDAQ:JBLU) and Southwest Airlines Co (NYSE:LUV) referred to the impact of coronavirus as even worse than 9/11, and this impact will last for months to come. Only last week, Uber has already seen ride volume drop 70 percent  in cities most affected by the outbreak and the pandemic is yet to reach its peak.

So, all this confidence does seem a bit surprising especially considering Uber’s CEO Dara Khosrowshahi evaluated the coronavirus at the beginning of March as “not material” because geographies affected at the time contributed only partially to  its main business. That was the case before the World Health Organization (WHO) declared coronavirus a global pandemic.

And it used to be so good…

On March 4, Lyft CFO Brian Roberts joyfully revealed that last week was the single biggest week in Lyft’s history, both when it comes to revenue and rides. Lyft was already doing great since early February, when Uber moved its profitability target to the end of 2020 and the increased investor confidence brought Lyft along. Lyft has targeted the end of 2021 to reach the same goal. Both competitors were focused at growing top-line results and fortifying their bottom line to reach profitability in the near future.

Uber at least has Uber Eats to its rescue

It’s a supply problem as well as a demand problem, Even food delivery is better for drivers or at least perceived as better since he impression is it’s less risky –you’re grabbing a bag of food, you can wear gloves if you want, or there’s  a no-contact feature where you can drop deliveries off at the door.” And COVID-19 will only further emphasize the different business models as it tests their resilience

While Lyft sells personal mobility services and that includes offering car, scooter and bike trips in the U.S. only. On the other hand, Uber has a food delivery business and a freight logistics division, Uber Eats and Uber Freight respectively. And it is this segment that could only amortize its coronavirus-related EBIDTA losses.

Lyft’s new meal delivery option

Lyft announced it will be offering delivery of critical medical supplies and meals in this critical time. Target groups include the elderly, those living with chronic diseases and students who usually get subsidized lunches through school.

The underlying problem is far greater

An immense material hit is certain. But any hit to both Uber and Lyft’s whole fiscal year (2020) results is likely to push profitability timelines. Both companies acknowledged in their annual reports that a “pandemic or an outbreak of disease or similar public health concern, such as the recent coronavirus outbreak” could materially affect their results. The coronavirus had also led to production delays with bikes, scooters and automobiles that are crucial to their business. And unfortunately, we already know with certainty there is no company who will be unharmed as the global economy will be hit far more than initially anticipated. Perhaps the most dangerous thing is that they were invented to support a lifestyle that won’t be possible for quite some time as the world is forced to adopt a much slower pace. and Considering human psychology, who knows how consumer behaviour will change after spending weeks and maybe even months in isolation. For the better or worse, we’re all in this together. The two companies also need to find ways to protect their employees as Uber already urged the Congress to include its drivers in the financial assistance program. But when it comes to the short-term, liquidity is key in any crisis and Uber’s $10 billion in unrestricted cash as of the end of February is beyond comforting for the time being. But nothing will ever be the same once all this is over- nor it should be as we’ll hopefully learn a lot from this and use it as an opportunity to improve current practices.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

BenzingaEditorial

Automotive Outlook – A Road to Hell?

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Ford News

The automotive industry was hit hard by COVID-19. Automakers were forced to shut down approximately  95% of plants across Europe and the US. In most cases, those measures were supposed to last only two weeks. Now it looks like factories will remain silent for much longer. Reopening dates are being postponed, while some auto producers like General Motors (NYSE: GM) decided not to give any reopening targets at all. Uncertainty is present everywhere these days.

Beating the invisible enemy

The COVID-19 is the new virus, an invisible enemy, that you cannot catch or hit back. The number of infected people is constantly increasing. The average growth rate is moving between 10% and 15% per day. According to the latest data, it can be said that the virus is not showing any signs of slowing down. It looks like COVID-19 has just started its horror show. So far, until the end of March that is, approximately 4.000 people died, but public health officials recently said that between 100.000 and 240.000 deaths can be expected until the end of this year. President Trump decided not to lift the restrictions as planned on Easter but to extend them. He warned that the US is facing “very, very painful two weeks” ahead.

Lockdowns are here to stay

Thus, it can be expected that lockdowns will continue. It is the only available option in the fight against the virus. China showed to the rest of the world that this strategy works. Yes, it is hurting everyone mentally, physically and financially, particularly the automotive industry. But it is an inevitable cost that we all must pay. For automakers, it means that there will be no production nor car sales any time soon and for much longer than they previously anticipated.

Crisis is only getting momentum

Because the crisis is getting momentum, analysts are now giving new forecasts and warning us not only about an upcoming recession but something even worse – economic depression in the automotive industry. Investors are worried, as they are starting to realize that unemployment rates could skyrocket and that factories may remain closed for the next two months or even longer. Even after the crisis is over, it is hard to avoid the upcoming economic downturn. People will probably try to postpone some bigger purchases until they are convinced that the situation is back to normal.

The question on everyone’s minds is: “Where is all this going?”. And we are all hoping that the answer is not: “ Down the road to nowhere.”

What do analysts expect?

Average expectations are that Detroit’s Big 3 automakers will all show sales declines in the first quarter of 2020. It is expected that General Motors , Ford (NYSE: F) and Fiat Chrysler (NYSE: FCAU) auto sales will drop somewhere near 6%, 16%, and 10% respectively compared to last year’s results.

And what about the whole year forecast?

Well those numbers are even worse. JP Morgan Chase & Co. analysts predict that approximately 10.3 million automobiles could be sold in 2020 and that is 40% down compared to last year. If this ends up being the case, sales would be even lower than in 2009, when only 10.4 million vehicles were sold. Just remember, it was the year when General Motors and Chrysler filed for bankruptcy. But, if the crisis continues, those forecasts can be even worse. In that case, sales may go even down – and that means literally down, 6 to 7 million vehicles to be exact. Best of all is that many analysts are relying on the last quarter when they expect a bounce-back. But what if the virus strikes again, like the second wave China is so scared of? This fear is making the country have to close up again just shortly after lifting its restrictions. This all seems like a road or even highway to hell, doesn’t it?

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

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BenzingaEditorial

Don’t Worry European Automotive Industry – The Government and Banks Have Got Your Back!

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Automotive industry Stocks Coronavirus

European automakers have shut down their factories due to the COVID-19 outbreak. All key industry players, like Volkswagen AG (OTC: VWAGY), Peugeot S.A. (OTC: PUGOY), Renault SA (OTC: RNLSY) and other industry peers decided to lockdown plants in order to protect the health of their workers. The virus has already caused a lot of damage to the European automotive industry. And the situation is only becoming more severe so help is more than needed.

Liquidity concerns

World’s biggest auto producer Volkswagen recently announced it is burning approximately 2.2 billion USD per week. This is approximately 40% of its last year’s average weekly revenues. The longer the crisis lasts, the bigger the losses will be. Volkswagen’s chief financial officer said recently that passenger car sales are expected to drop approximately 40% in March.  Considering the not-so-optimistic outlook by the World Health Organization, what will happen as this health crisis continues? How big will those cash drains be? It is hard to imagine the consequences at this point.

Driving without cash fuel?

The automotive industry is a classic example of a highly capital intensive and cyclical industry. Fixed costs are relatively high compared to other industries. Thus, capacity utilization is one of the key performance indicators. But in these times, when plants stand still, losses are growing every day. Liquidity issues are currently avoided thanks to previously formed cash reserves and available credit lines. But liquidity concerns are only getting amplified in CFO’s minds. Bank managers as well as investors are only getting more worried and afraid too. They are quite reluctant to lend money or invest in loss-making companies. It is not surprising that share prices and credit ratings are falling like a rock. Everyone is wondering how will the automotive industry continue to drive without any “cash fuel”?

It’s time for central and investment banks as well as the government to jump in. And they did just that as European Central Bank (ECB), European Investment Bank (EIB) and European Commission (EC) announced that they are ready to support the automotive industry and protect their employees.

The financial injection is coming – ECB

ECB has launched a 750 billion EUR Pandemic Emergency Purchase Programme (PEPP). Asset purchases will last until the end of 2020. ECB will inject money into the European financial system and it will increase its liquidity. Corporate bonds are also eligible for purchasing. And it is a chance for all reputable carmakers to secure funding until the situation settles down. According to ECB President, Christine Lagarde, ECB will be even willing to increase this monetary package should this be considered necessary.

EIB also jumped in

European Investment Bank (EIB), the lending arm of the European Union, also decided to help. It will finance companies with approximately 40 billion EUR. The money will be used for working capital and overall liquidity maintenance financing. Fiat Chrysler (NYSE: FCAU) already made some arrangements with EIB last week when a new 3.5 billion EUR credit facility was agreed. Most Fiat Chrysler factories around the globe are currently locked down. This kind of strong support is now more than needed. It does not only fortify the company’s cash position, but it also sends a clear “don’t be afraid” message to the financial market, investors and creditors.

EC even went a step ahead

Finally, the European Commission (EC) also announced that it will relax existing rules that limit EU member states to financially support their companies. Now, national governments can use the arsenal of available financial weapons like direct grants, tax advantages and various advance payments to boost liquidity and the overall economy.  But that is not all. EC also came up with an “Escape clause” activation proposal that will allow member states to forget the budgetary constraints which the EU normally imposes. Overall, the EU is determined not to let COVID-19 win.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

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BenzingaEditorial

Solar Is Emerging As the Best Bet

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Solar Technology Companies

The renewable energy sector is one of the rare bright spots with a potential to recover in a global economy which has been put to a virtual standstill by the COVID-19 pandemics. Even in troubled Spain that is on absolute lockdown with its citizens not being able to leave their homes in an effort to stop the outbreak , the solar industry is expecting a rebound. Solar energy is expected to be among the first sectors that will pick up the pace after the crisis.

As for the US, the outbreak has emptied out workplaces across the US, the solar industry is making a case to  be exempt from mandatory shutdowns. As for Australia, its citizens are stocking up on renewable energy storage in response to the pandemic. So no matter where you are, solar technology seems to be the right pick despite the fact there is no guarantee during this unprecedented crisis the world is facing.

Working from home

The imposed measure of social distancing has crushed the already troubled airline industry. And it also has the potential to slow down even the shining solar industry. While certain aspects of this development can take place online as people are asked to work from home, project construction cannot be done this way. For now, the industry is carrying on with what tasks it can by being behind a laptop but delays are inevitable.

Some were hit less than others

First Solar, Inc.’s (NASDAQ:FSLR) has been heavily hit by CVODI-19 like its peers as it fell 37.5 % this year. And that is even worse than the S&P 500 drop of 21.3%. But First Solar can weather this storm thanks to a net cash balance of $1.8 billion. Also the company is planning to keep manufacturing going unless the government imposes more severe restrictions so it is not entirely unimaginable that the company’s results fall close to the projected tree. And although cash cannot cure all the wounds of the crisis, a strong balance sheet is surely an advantage over its competitors to amortise short-term blows at least.

Some were lucky- or smart enough to protect their supply chains

Franchise Holdings International (OTC:FNHI) got the best of solar but also some other worlds through its investment Worksport. By planning to launch the world’s first solar tonneau covers for pickup trucks, it has not only made solar technology affordable but it possibly helped the struggling automotive industry move forward to the next era as its TerraVis technology will transform any pickup truck you have in mind. Besides harvesting solar energy, Worksport is also promising a fast 30-min charge. Its rich portfolio of intellectual property and the fact it only shortly paused its factories during the outbreak amortized the COVID-19 blows and the company’s supply chain even managed to remain intact. Saved by the Sun it is! And there is Tesla (NASDAQ:TSLA) who is never behind as it’s about to make solar power a common feature on electric cars starting with its Cybertruck. After that launch, the flamboyant Musk even announced that Tesla’s new pickup truck will have a solar accessory on the roof that will add 15 miles of range per day.

Growth of renewables can’t be stopped even by COVID-19

Solar stock will surely be a haven for investors during these hard times. As the US government also considers how to aid airlines, as well as oil and gas, renewables are hoping for a place on that list and the solar industry surely hopes it can successfully lobby for sector-specific relief by being irreplaceable to the economy. It surely is to the future of anyone living on Earth.

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

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