LIZ: SOME BREAKING NEWS.
LOOK AT THE DOW JONES
INDUSTRIALS.
IT IS NOW DOWN JUST 13 POINTS.
WE ALSO HAVE THIS DEVELOPING
STORY.
A MEASURE WAS JUST PASSED IN THE
LAST COUPLE OF HOURS BY THE VERY
POWERFUL NEW YORK CITY TAXI AND
LIMOUSINE COMMISSION.
THE NEW REGULATION CALLS FOR A
VEHICLE CAP THAT WOULD IN
ESSENCE BLOCK THOUSANDS OF LYFT
AND UBER DRIVERS FROM LICENSING
THEIR OWN VEHICLES WHILE INSTEAD
FORCING THEM TO PAY EACH YEAR TO
RENT CARS.
MORE THAN 80,000 UBER AND LYFT
DRIVERS COULD BE AFFECTED BUT
IT'S NOT AFFECTING THE STOCK.
LYFT IS UP NEARLY 4%, UBER
HIGHER BY MORE THAN 1%.
THIS IS ONE OF 2019'S HIGHLY
ANTICIPATED UNICORN IPOs, LYFT,
PREPARES TO REPORT EARNINGS
AFTER THE BELL WHICH IS IN 36
MINUTES.
OUR NEXT GUEST WAS THE VERY
FIRST TO ISSUE A BUY RATING ON
LYFT EVEN BEFORE IT WENT PUBLIC.
HE BELIEVES THAT LYFT IS THE
CLEAR WINNER IN THE RIDE HAILING
RACE.
WE ARE ALSO JOINED BY D.A.
DAVIDSON, SENIOR VICE PRESIDENT,
TOM WHITE JOINS US ALONG WITH
BARRON'S ASSOCIATE TECH EDITOR,
ERIC SAVIST.
TOM, AS THE FIRST TO ISSUE THIS
BUY RATING BEFORE LYFT IPO'ED,
EXPLAIN YOUR REASONING ON HOW
YOU THINK THIS NEW MEASURE COULD
AFFECT LYFT AND WHY YOU ARE
STILL SO BULLISH ON THE STOCK.
>> I THINK THE MEASURE TODAY,
FIRST I'M NOT SURE HOW WIDELY
DISSEMINATED IT'S BEEN TO THE
INVESTOR COMMUNITY.
LIZ: I THINK WE ARE THE FIRST
NETWORK TO REPORT IT.
>> EVEN THOUGH ONCE IT GETS OUT,
I THINK IT MAYBE WAS ALSO A BIT
ANTICIPATED.
IT'S BASICALLY AN EXTENSION OF A
CAP THAT'S BEEN HERE IN NEW YORK
FOR QUITE SOME TIME.
THERE WERE SOME ADDITIONAL
ELEMENTS TO THE CHANGE IN THE
REGULATION.
FOR EXAMPLE, THEY ARE GOING TO
FURTHER REDUCE THE PERCENTAGE OF
A TYPICAL NEW YORK CITY DRIVER'S
TIME WHERE THEY CAN DRIVE AROUND
MANHATTAN WITHOUT ANY PASSENGERS
IN THE VEHICLE.
THESE ARE DEFINITELY A NEGATIVE
FOR LYFT AND ALSO FOR UBER,
PARTICULARLY IF OTHER STATES AND
OTHER LARGE METROPOLITAN AREAS
FOLLOW SUIT.
LIZ: IT COULD HAVE BEEN WORSE IS
WHAT YOU'RE SAYING.
>> IT COULD HAVE BEEN WORSE.
I DON'T THINK PEOPLE WERE
EXPECTING NEW YORK WAS GOING TO
UNDO THE CAP.
LIZ: ERIC, I WANT TO GET TO YOU.
YOU'VE GOT TO TELL ME WHAT YOU
THINK AS A JOURNALIST WHO
COVERED BOTH OF THESE STORIES.
WE ARE EXPECTING NUMBERS FROM
LYFT.
THEY DO HAVE REVENUES EXPECTED
AND THEY ARE DOING GOOD
BUSINESS.
WHAT DO YOU THINK ABOUT THIS NEW
MEASURE?
>> WELL, LOOK, I THINK NEW YORK
IS RESPONDING IN PART TO THE
NEED TO CONTROL WHAT IS A VERY
BAD TRAFFIC SITUATION.
THERE'S THE RECENT RESEARCH
PAPER THAT CAME OUT FUNDED BY
LYFT AND UBER THAT TALKS ABOUT
HOW MUCH OF THE CAR TRAFFIC IN
MAJOR METROPOLITAN AREAS,
INCLUDING NEW YORK AND SAN
FRANCISCO, ARE LYFT AND UBER
TRAFFIC.
IT'S AN INCREASING PERCENTAGE.
IN SAN FRANCISCO IT'S AS HIGH AS
13% OF DAILY TRAFFIC IN THE
CITY.
SO I THINK THAT THERE IS A NEED
TO FIGURE OUT WAYS TO REDUCE
UNNECESSARY CAR TRAFFIC AND TRY
AND PREVENT A LOT OF EMPTY UBER
AND LYFTS FROM DRIVING AROUND
LOOKING FOR THEIR NEXT RIDE.
THAT'S WHAT THE NEW YORK TAXI
COMMISSION IS TRYING TO
ACCOMPLISH.
LIZ: NONE OF THESE ISSUES REALLY
TACKLE THE BIGGEST ONE, AND THAT
IS THE AMOUNT OF MONEY THAT
THESE COMPANIES HAVE TO PAY
THEIR DRIVERS.
LYFT IS EXPECTED TO REPORT $800
MILLION PLUS IN REVENUES BUT
STILL A LOSS OF $1.74, 75.
WHEN ARE EITHER OF THESE NAMES
GOING TO POST A PROFIT WHEN THEY
HAVE TO PAY THEIR DRIVERS?
>> IT'S A VERY IMPORTANT
QUESTION.
WE PERSONALLY THINK LYFT IS
GOING TO BE PROBABLY ON A
SHORTER TIME FRAME FOR ACHIEVING
PROFITABILITY THAN UBER.
UBER IS JUST FIGHTING A LOT OF
VERY INTENSE COMPETITIVE BATTLES
NOT ONLY IN RIDE SHARING BUT
UBER EATS, ONLINE FOOD DELIVERY
GLOBALLY IS PROBABLY MORE OF A
DRAG ON PROFITABILITY THAN CORE
RIDE SHARING IS.
IN LYFT'S CASE, THIS YEAR THEY
SIGNALED THAT IT'S GOING TO BE A
PEAK INVESTMENT YEAR SO FOR
TONIGHT AND EARLY THE NEXT
QUARTER OR SO, I'M NOT
ANTICIPATING INVESTORS ARE
REALLY GOING TO HOLD THEM MUCH
TO MAKING MEANINGFUL PROGRESS ON
THE PROFITABILITY LINE BUT I
THINK REVENUE GROWTH WILL BE THE
MAIN METRICS.
LIZ: WHAT'S YOUR CALL ON THE
STOCK?
>> WE HAVE A BUY RATING.
LIZ: ERIC, FINAL THOUGHTS BEFORE
WE GET THESE NUMBERS ON LYFT AND
UBER.
>> I JUST WANT TO TOUCH ONE
THING ON THIS COST OF DRIVER.
THERE IS A MEASURE IN THE
CALIFORNIA LEGISLATURE THAT
WOULD REDEFINE, FORCE THE
COMPANIES TO DEFINE THEIR
DRIVERS AS EMPLOYEES RATHER THAN
CONTRACTORS WHICH WOULD
SUBSTANTIALLY INCREASE THE
COSTS.
I DON'T THINK THIS ISSUE IS
GOING TO BE SETTLED FOR AWHILE
IF IT GETS PASSED IN CALIFORNIA.
YOU CAN IMAGINE COPYCATS IN
OTHER STATES.