We’re Delivering a 95.8% Win Rate
And now let’s dive into today’s Trade of the Day…
Last week, shares of ride-share company Uber (NYSE: UBER) popped hard.
At one point last Thursday, the stock was up 42% at its peak.
Fellow ride-share company Lyft (Nasdaq: LYFT) popped as well.
The strength in these two companies came on the news that Uber executives said the company has $10 billion in cash reserves to withstand the effects of COVID-19.
In response to that, I said…
They better say goodbye to that reserve because I believe they’re going to hemorrhage through it very quickly.
Just remember, Uber was bleeding cash before any of this panic started.
In fact, in 2019, Uber’s net income was down $8.5 billion.
How on Earth is the company going to survive this pandemic?
Think about the health risk right now…
Will any Uber or Lyft driver want a potential COVID-19 carrier off the street hopping into their car? Uh, no.
And on the flip side, will any customer want to jump into a car with a possible COVID-19 carrier behind the wheel?
Uh, no.
Heck, even if the last passenger in the back seat was a carrier and you’re the next one to get in, you’re at risk.
Yea, that’s right. You know that stranger who was just in the back seat of a ride-share – who coughed on the seat – that you’re now sitting on?
That’s how easily this virus can get passed. So again, that’s a big plate of “no.”
Quite honestly, this is a major lose-lose situation for the current ride-share business model. That’s why I think both Uber and Lyft are toast.
As ride-share companies bleed cash to weather this storm, I think both companies are in big trouble.
Action Plan: In The War Room, members played puts on Lyft.
Why?
Well, because while Uber has around $10 billion in cash reserves, Lyft has around only $500 million. And remember, both companies still operate at a loss.
Lyft has $7.65 in cash per share – which I believe is a reasonable downside target. As I said last week, ride-sharing companies are currently “coronavirus distributors.”
Join me in The War Room today so you’re there for our next profitable recommendation!
More from Trade of the Day
This Secret Helped me Retire Many Times Over
May 3, 2024
Play Short Squeezes “To The Moon”
May 2, 2024
Place Your Bets, Apple Earnings Tonight
May 2, 2024
How to Trade the Market’s #1 Fear
May 1, 2024