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Is LYFT Stock a Solid Long Term Investment?


Trying to find a particular stock that works well as a long-term investment option is sort of like driving a car while blindfolded these days. The stock market has been excessively volatile lately, thanks in large part to the never ending Covid-19 pandemic and world issues such as the war in Ukraine. The stock market has a tendency to reflect all of these things and when more than one thing is happening at a time, it can make you feel like you're on the roller coaster ride from hell. If you're trying to figure out how to invest successfully, you're probably feeling like you don't really know where to turn right now, especially if you're looking at stuff in the long-term. The truth of the matter is that when you're struggling to figure out what's going to work in the short-term, it's even harder to figure out what you're going to do for a long-term investment. As such, a lot of people are turning to services that didn't even exist more than 10 years ago, but are an absolute way of life in today's world. As such, one of these stocks that typically comes up in these types of discussions is Lyft. If you yourself have considered purchasing this stock as a potential long-term investment, then it's important to start taking a closer look at things so you know whether or not you stand a reasonable chance of making money off of this endeavor as opposed to spending even more money on something that's not likely to bring you a decent return on your investment.

About the Company

One of the most important things that you'll want to look at whenever you're considering any company stock as a potential long-term investment is how long they've been in business. This matters because you want to pick one that has a proven track record. If they've been in business for several years, then there is at least a decent chance that they’ve figured out how to deal with the ups and downs of operating a business in a manner that will allow them to continue being in business as opposed to shuttering their doors. In this particular case, Lyft has been in business since 2007. Knowing that you're dealing with one of the more popular companies in today's society and having the knowledge that the company has been around for 15 years, you know that you can at least take a look at the company's stock in order to see how things look on that end. In other words, the company has passed the first test, but will it be able to pass all of the tests that you will have to put it through before you decide whether or not you should be investing in it as a long-term option? In order to find out, you have to start looking at the way that the stock itself is performing so you can make a better decision.

LYFT Stock in Today’s Trading

In today's trading, the stock is currently selling for $36.31, up 4.91% from yesterday. That's definitely a plus, especially considering the fact that most of these types of companies are still trying to find their footing after a dramatic slowdown in business during the pandemic. The question is, is it a good idea to purchase the stock as a long-term investment option when something similar could potentially happen again, causing another potential slowdown in business? If you really want to analyze the way the company is capable of performing, keep in mind that the pandemic slowed most businesses down across the board. Sure, there were a few that actually managed to do more business than usual, but that's the exception and not the norm. Obviously, any company that depends on one's ability to travel from one location to another in order to remain viable is going to struggle when everyone is being told to stay home. The mere fact that the company survived the pandemic is something worth noting. It would have been very easy for it to simply vanish off the face of the Earth, especially when you consider the fact that the company has long been considered something of a distant cousin when compared to its competitor, Uber. It comes down to a simple fact. Uber came onto the scene first. As such, they more or less had a monopoly on the market for some time. Then Lyft came along. While the market became more competitive, the company has long been considered as one that exists in Uber's shadow. As a result, a lot of people thought that Lyft would simply fold when the pandemic struck, but they managed to survive and they're still going strong today. They've already exceeded expectations by the mere fact that they are still in business. When you look at things from that perspective, the idea of investing in their company as a long-term option might become a bit more appealing. It's also worth noting that if the only thing you were to look at is the prices for today's trading, you're looking at a stock that has gone up in the last 24 hours and you're also looking at something that is selling for a decent price, yet it's not so expensive that it's unattainable for most investors. The next question is, how has the stock performed throughout its history and what is it predicted to do in the future?

The History of LYFT Stock

Despite the fact that the stock has gone up over the course of the last 24 hours, that has not been the case recently. As a matter of fact, the stock has actually been in a downward trend for quite some time now. The truth of the matter is that it never has fully recovered in order to perform at the same level that it did prior to the pandemic. This in and of itself may not seem like such a big deal. That said, there are other issues that are currently causing the stock to experience fluctuations. Over the course of the last 30 days, it has fluctuated a great deal, largely as a direct result of an economy that is still trying to recover and the fact that consumer demand isn't as high now as it was before Covid-19 struck. There are a couple of different reasons for this. First and foremost, a lot of people decided that they actually liked working from home and chose to continue doing so even when they were told they could return to their offices. By the same token, a number of businesses found that it’s actually quite cost-effective to have people work from home, meaning that they're also in agreement when it comes to the idea of having more employees who work remotely. Add to that the fact that some people are still choosing not to go out and be in large crowds and you have a drastically reduced clientele. All of this has done a real number on the company's stock and its ability to remain steadfast.

More Recent News

More recently, the company announced that they were going to be charging a surplus on all rides due to the increase in the cost of fuel. This isn't something that's exactly a revelation, especially when you consider the fact that gas prices in the United States are currently trending upward, often to the tune of $4 a gallon or more. In order for the company to stay afloat, they practically have to charge more money until these prices stabilize. That being said, customers and stockholders alike weren't exactly receptive to the news. As a matter of fact, the same day that the company announced this surcharge, which only took place in mid March of this year, shareholders began selling off their stock and prices plummeted. This has been a blow to the company, but it is one that was necessary for them to take. In addition, you have to anticipate that other companies such as Uber will be doing the same thing in short order. Until gas prices come down, it's almost impossible to think that any company which depends on transportation for its very success would be able to do anything but raise their prices. Therefore, it's likely that Lyft stock will eventually stabilize, once people get over that initial shock. It's also possible that gas prices will eventually stabilize and this will become a non-issue for the company. However, it's not exactly likely that this is going to happen anytime soon, as gas prices typically increase during the late spring and throughout the summer.

A Year-by-Year Comparison

If you want to compare how Lift is doing this year with the same time last year, you'll likely be impressed. As a matter of fact, their earnings are up by 73% in a year-by-year comparison. That's definitely something to get excited about, but is it enough to make you want to invest in the company as a long-term option? There is no doubt that Lyft is in the process of recovering from all of the hits it took during the pandemic, and that's definitely a good sign. Its revenue is up, it's doing better than it was doing this time last year, and its fourth quarter earnings showed an increase over the third quarter as well. Despite these seemingly positive facts, a lot of stock market analysts actually believe that there are other options out there which could potentially perform better as a long-term investment. Is there something deeper going on here that most potential investors aren't aware of which could potentially mean that something dire is on the horizon for Lyft? If that's not the case, then why are so many stock market analysts against investing in the company as a long-term option?

Post-Pandemic Jitters

As it turns out, the major issue that a lot of stock market analysts have with Lyft’s stock is the fact that the stock market itself hasn't fully recovered because the economy is still somewhat in a recovery phase. As such, it's difficult to advise someone that they should invest in any stock as a long-term investment when there is the potential that something could slam the economy right back into survival mode and stocks that depend on people being out and about could suddenly find themselves at odds with the rest of the world yet again. It seems that a lot of stock market analysts are being overly cautious, probably because they watched people practically lose their shirts when the pandemic struck and they’ve watched the economy bounce back and forth in a number of knee-jerk reactions every time somebody reports something on the news. That can make it difficult to know exactly how anybody should move forward with regard to a long-term investment. By default, anything that is related to transportation or hospitality has found itself on the bubble. They're usually the first things that stock market analysts advise people to get rid of and they're typically not popular candidates when it comes to the types of stocks that analysts are telling their clients they should invest in.

If you can get past the fact that a lot of stock market analysts are nervous about the idea of investing in Lyft or any other transportation-based stock as a long-term investment, then you might see that the numbers appear to predict a different story. As a matter of fact, you might be able to invest in Lyft stock at its current price and make a decent amount of money after holding on to that stock for a year or perhaps even 18 months. At the moment, the company seems to be poised to continue its upward trend. Whether or not you want to hang on to that stock for three, four or even five years remains to be seen. That would all depend on constantly analyzing the stock market itself along with this particular stock’s performance, and then making decisions accordingly. That being said, this is a stock that you might consider purchasing as a long-term investment because the company just might have everything going for it that it needs in order for your investment to be a successful endeavor.

Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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