How to Buy Lyft Stock: Like its ridesharing competitor Uber, Lyft [NASDAQ: LYFT] was once a massive unicorn company that drew a valuation well over $15 billion when it was private. In fact, the Lyft initial public offering valued the company at a cool $24.3 billion back in the spring of 2019. Hopes were high for the first ridesharing IPO, but savvy investors knew it wouldn’t hold that inflated value.
The stock tumbled almost immediately after launch. Nearly a full year later, LYFT shares are trading at just over half the IPO value. While those initial investors may have absorbed losses, now may not be the worst time to consider adding Lyft stock to your portfolio. Here’s why.
Lyft This Stock into Your Portfolio
Lyft is expanding big time. The company opened 2020 with a load of promotional deals, including 50% off up to 10 rides through March. It’s on a mission to become the Uber of…competing with Uber.
In fact like Uber, Lyft is expanding into food delivery with its freelance infrastructure. It also uses its software platform to for scooter shares, bicycle sharing, and more.
This puts it in competition with companies like Bird/Lime, Postmates/Doordash, and Jump. Each of these services will inevitably need to work with local businesses to compete with Amazon’s massive footprint.
Walmart, for example, partners with Lyft to offer grocery delivery services to compete with the likes of Albertsons. Lyft also partnered with Chase in 2020 to offer 10x points to Chase Sapphire, Freedom, and Ink cardholders through March 2022 on rides.
Market analysts agree that the market for services like Uber and Lyft is there. The company has the numbers to compete against newer entrants while pulling market share from its larger rival.
Things seem to be heading up, so is it a buy?
Is Lyft Stock a Buy?
Barron’s reported at the end of 2019 that Lyft is still a buy, according to UBS. Jim Cramer’s The Street agrees, with both reporting it as a long-term play. The reason is simple – although Uber and Lyft are both losing money at a rapid rate, they’re in a hot market, thanks to Amazon.
Since its acquisition of Whole Foods in 2017 gave it a formidable retail footprint, Amazon has been expanding its smart home integration and even replaced FedEx and crippled the U.S. Postal Service with its own in-home delivery network.
Partnerships with services like Lyft, Postmates, and Instacart gives existing brick-and-mortar retailers a powerful crowdsourced ally against this seemingly unstoppable juggernaut.
In the long-term economic outlook, most analysts agree that the need for Lyft will never go away. But that doesn’t necessarily mean Lyft itself will be the one serving that need.
Any of the aforementioned companies (Uber, Instacart, Bird, Postmates) has a chance of securing the marketplace with the next big innovation. It’s clear we love delivery, ridesharing, the gig economy, and P2P marketplaces. Lyft remains a strong brand presence, even if things continue being shaken up at the company.
What to Know Before Buying Lyft
Lyft earned $1 billion in quarterly revenue in the fourth quarter of 2019. The company is second only to Uber in ridesharing, owning 39% of the market. This makes Lyft a formidable brand, however it’s no guarantee of success. For example, Lyft continues losing money.
This is because its operating costs dig heavily into revenue. In 2018, for example, the company generated $2.16 billion in revenue, but only $913.2 million of that was profit. The rest went to pay operating costs.
Profits are also being eating by legal fees. It’s facing fresh sexual assault lawsuits in 2020 for not doing enough to protect women who use its service. These allegations could stifle its growth, much of which can be attributed to customers fleeing Uber over similar problems.
For their parts, both Uber and Lyft are working on ways to make rides safer, such as usage of GPS, dash cameras, and other tracking technologies. Drivers and passengers are learning their own ways to stay safe.
Also of note, Lyft is squeezing already razor-thin margins by offering promotional deals to boast its customer base. It could pay off big in the long run, so long as the company doesn’t get crippled by ongoing legal battles.
How To Buy Lyft Stock
If you want to purchase Lyft stock for yourself, you’ll want to open a brokerage account.
Brokers like tastyworks, Merrill Lynch, E-Trade, Charles Schwab, and TD Ameritrade are commissioned to buy and sell stocks to be held in your investment account. This saves you the trouble of, say, holding onto a physical stock certificate of Lyft stock.
Which stockbroker you choose is a matter of personal preference. It also depends on your personal investment style. The four brokerage firms mentioned are merely examples, not endorsements. Be sure to perform due diligence to find a broker whose fee structure and service works for your needs.
Each firm has different funding minimums, incentives, and associated costs. They typically offer competitive rates, but you need to read the terms and conditions to fully understand the deal. Be sure to understand what you’re getting yourself into before signing on the dotted line of that contract.
Place a Buy Lyft Stock Order
Lyft trades on the Nasdaq and its ticker symbol is simply LYFT. This makes it easy to find wherever you want to buy it. What happens is you place a buy order for the quantity of shares you wish to buy at a preferred price per share, called a limit order.
Buy and sell orders sit at the exchange until they match up, which may take time, depending on the price set.
Some investors prefer to purchase the stock ASAP and will pay the best price available in sell orders. This is called a market order.
However you choose to purchase it, be sure you have the money in your account and execute the trade. You’ll soon be a Lyft shareholder and can choose to hold or sell at your own discretion.
You simply need to select the number of shares you wish to purchase. For example, if a stock trades at $50 per share and you purchase 100 shares, the total cost will be $5,000 + any commissions/fees.
At tastyworks, you won’t pay a dime in commissions costs to buy or sell Lyft stock, however clearing fees – which tend to be small costs applied by stock exchanges – still apply.
A bonus tip: If you own 100 shares of LYFT stock, you can also sell a call option for each 100 shares you own, which creates an income stream, even though LYFT does not pay a dividend!
Want to see how much you can be paid, simply check out our covered call screener here >>
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.