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This Underpriced Rideshare Company Is a Better Buy Than LYFT and UBER

Stocks mentioned in this report: Uber (NYSE: UBER), Lyft (NASDAQ: LYFT), HyreCar (NASDAQ: HYRE), Last Mile Holdings (OTC US: AZNVF / TSX-V: MILE), BlackRock Capital (NASDAQ: BKCC), Goldman Sachs (NYSE: GS), JPMorgan Chase (NYSE: JPM)

The shift to a more efficient and effective means of transportation within congested cities is being lauded as a marvel for its computer engineering in the changing paradigm of transportation. People are becoming more mindful of how they navigate cities.

Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT) are essentially taxi service companies but the semantic and legal distinction is ridesharing vs ride hailing. Ride hailing is technically a process of “hiring” a personal driver by a rider to reach the exact location where he wishes to go. Ridesharing, on the other hand, is essentially car pooling with the rider sharing the vehicle with other passengers.

This discussion has no interest to me because the notion of restricting one’s ability to use their own property as a business should be moot. I do not care if taxi companies have had a monopoly on the service for decades nor that they are unionized. The insurance is available now, so the question of insuring has been removed, and I do not need any extra training or licensing to travel with a stranger compared to a friend or family member.

What I do find disheartening is that it is not bettering society nor adding any value. These companies are cute in their ability to use scale to their own personal advantage to shift funds from taxicabs to themselves.

Make no mistake this is not making the workers for these companies wealthy. In fact, it is the case of globalist type companies parasitically leaching off business models for personal gain.

Unless all these Uber and Lyft drivers were forced to have electric cars, there is no shared gain for the community nor the environment. In fact, arguably this would have worse impact on infrastructure and emissions if more drivers are forced to work lower-income and opportunity jobs. There is no decrease in traffic, noise, congestion, or any other environmental consideration.

Uber’s claim that their New York City drivers make $90,000 got the company slapped with a $20 million fine for fraud.[1][2] And other PR pieces seem to float salary ranges of anywhere from $16/hr to $19/hr.[3] This is what people call a side hustle job in the new ‘new’ where we are constantly told there are so many jobs; yet so many people need more than one job to survive.

These business models are laughable and remind me of the first internet bubble where we were excitedly told about the new valuations and new metrics for valuing companies. We could let companies borrow with equity or debt for as long as they like with little cash flow or revenue that would come sometime down the line.

Of course, they were wrong. What has worked for decades still works today. The basics of business are straightforward.

The NYMAG Intelligencer did a wonderful piece on Uber and Lyft, and it lays out the Amazon model of underselling competitors indefinitely with the idea of raising prices once it has reached ‘scale.’ This model has worked for Amazon, and it has miffed value investors for some time that they could practice business this way.

Uber states: “We can choose to use incentives, such as promotions for drivers and consumers, to attract platform users on both sides of our network, which can result in a negative margin until we reach sufficient scale to reduce incentives.”[4]

This means, “We sell our product below cost.”

The argument some used was the negative earnings of airlines as a whole — the difference is that rideshare is not innovation. It is just convincing more people to work part time because there are no career jobs, and funneling the money to a smaller group of investment banks, funds and financiers. There are plenty of other ways to travel effectively and efficiently, which leads me to a couple companies that actually do offer some benefit to society.

 

HyreCar (NASDAQ: HYRE)

This company allows car owners to rent their idle cars to ridesharing service drivers, such as Uber and Lyft drivers. Oddly enough, this is an interesting model, but because it relies entirely on Uber and Lyft models, it is less then thrilling. At least it is using inactive depreciating assets to generate some passive revenue for people. It is basically a clever way of re-imagining taxis and can generate some money for people.

 

 

Small Vehicles

We see kids, teens and young adults flying around on scooters, e-bikes, and new, small electric equipment that not only looks fun, but are also quick, reliable and effective modes of getting around congested cities. This is a trend that is gaining momentum, and what is making it much more interesting is that many of these solutions are rideshare, so ownership is not required.

Sure, you can buy this equipment on your own but people are getting used to renting transport on an as needed basis. Why deal with the maintenance and storage in small city living spaces when you can use an app to track down a green, clean, and cheap way to travel. It will likely get you to your destination faster and will do so in an environmentally conscious way.

 

E-Bikes

The global electric bike (e-bike) market size is projected to reach US $46.04 billion by the end of 2026.[5] Recent advancements in lithium-ion batteries will contribute to this market growth. According to a report published by Fortune Business Insights, companies like Zero Motorcycles (Private) and Last Mile Holdings (OTC US: AZNVF / TSX-V: MILE) are transforming this space with exciting business models.

Let me take a step back on this because I am from a different generation in which having a ‘cool car’ was a significant dream. Mine was downplayed by some extent to those a generation earlier that obsessed about muscle cars, street rods and aggressive, angry sounding tough cars that are still held dear by car collectors.

The car is the staple for the economy and is not going out of style — it cannot because it is such a key driver in the economy. But with that being said, there is an encouraging shift in the reality of ownership and also effectiveness and efficiency in regard to getting around a city motorists face an average of 44 seconds in delays per mile every day according to the UK Department for Transport.[6]

 

Average Speeds in Major Cities

  • Austin, Texas (6 mph)
  • Cincinnati, Ohio (9 mph)
  • London, UK (8, 9 mph – two corridors)
  • Los Angeles (8 mph)
  • New York City (7, 8, 8 mph – three corridors)
  • Pittsburgh, Pennsylvania (8 mph)

If we look to Asia, we see much of the same. Imagine the congestion and the emissions! Think of the pollution in these megacities throughout Asia. The birthrates in these countries are rising (unlike the West), so imagine the critical need for clean transportation initiatives.

This is not all just about speed and efficiency. Being green, clean, and hopefully healthier is the new cool. The entire shift that the World Economic Forum (WEF) talks about includes ESG (environmental, sustainable governance), and they all sing the same tune as BlackRock Capital (NASDAQ: BKCC), Goldman Sachs (NYSE: GS), JPMorgan Chase (NYSE: JPM), and other globalist banks. The ‘Money’ wants to see global change…

So, let’s make some money doing that!!!

 

Last Mile Holdings (OTC US: AZNVF / TSX-V: MILE)

Last Mile Holdings is a micromobility company that designs and manufactures light electric vehicles, and turn-key solutions for urban transportation.

The company is a combination of rideshare platform along with custom-engineered, zero emission, fully electric sit-down scooters built for bike lanes and streets, away from sidewalks and pedestrians. It takes the best of competitive models for the conscious and mindful rider.

Their OjO scooter has two swappable 48-volt lithium-ion batteries allowing it to go up to 50 miles on a full charge at a top speed of 20 mph. Their swappable battery pack adds another key dimension.

In Vancouver, Canada, there are rideshare bikes set up in several areas. But each day, they must be dropped off by truck and then once again picked up in the evening. Someone must come and deliver the bikes to and from each location. Having swappable batteries that can be charging in a truck is much more efficient! The e-bikes also include GPS technology, allowing for geo-fencing and automated speed throttling.

Last Mile’s Gotcha rideshare platform has a robust portfolio of exclusive long-term contracts. It was recognized as one of America’s fastest-growing private companies in 2018 and 2019 on the Inc. 5000 list and was a finalist in Fast Company’s 2019 World Changing Ideas Awards in the Health and Wellness category for providing students with sustainable micro-transit products that encourage a healthy lifestyle.

The company has a nationwide blueprint for how to get to scale and has executed step by step with precision to position itself as the premier electric bike scooter and vehicle provider. This is an opportunity to enter the clean, green transportation market. There are lots of outstanding stories out there about how we are changing and making city travel more efficient.

Before we go any further, let me address the elephant in the room: as we go to print, the stock has plummeted and hit a low of CAD$0.03/US$0.02. To me this is a steal. You can buy a portion of this company which is now valued at a CAD$2 million market cap. By the time you finish reading this article, I think many would think there is much, much more value in this company then its stock price reflects.

 

A Marriage of Equals

Many of you may already know this company as OjO Electric or as Gotcha Mobility. Last Mile formed from the merger and consolidation of business of these two companies in Q1 2020.

Gotcha has four electric vehicle options including their e-bike, e-scooter, electric car and the Sit, which is much like a moped. The company brought over 80 contracts to the merger with 80% of those being exclusive.

Back on November 4, 2019, Max Smith appeared on Jim Cramer’s Mad Money and laid out how the landscape of movement is changing. The new movement for cities is about efficiency — clean and green with flexible mobility.

This used to mean owning your own car, parking space and traveling through traffic. In large cities, we saw bike couriers fly around traffic because they are optimal. Last Mile takes that idea to the next level.

OjO was initially created to handle food delivery. Living in Vancouver, this market is hard to miss. We have an abundance of food delivery platforms and this was gaining traction before COVID-19. Since the pandemic, food delivery has escalated dramatically. It is by far the most effective and efficient way to get food to someone while it’s still hot!

 

 

Not Just a COVID Play

While there is a COVID angle, the overall health and wellness aspect of this company and that future vision is what attracted me to this company.

Kids returning to school are currently having to attend many lectures remotely and are avoiding public transportation since being in proximity to others is still a concern.

Mass public transport will cause parents and some kids to be especially stressed compared to the freedom and speed of movement of an electric option when they return to class. Even those who are on campus today or who will be in 6 months from now could find an electric option a huge advantage when rushing from Economics class across campus to Math class.

Even before COVID-19, the average time spent waiting on public transportation was 40 minutes. There is no doubt that the company has had to endure the economic havoc that COVID has created but they are well-positioned for the future.

Last Mile is also a solution that is in alignment with the message of ESG major investment banks are promoting. And this movement is not just lip service. There is going to be a major shift with the Great Reset, and it is time to position yourself with tech stocks that share your values.

 

A Highly Undervalued Opportunity Awaits

The stock of Last Mile Holdings (OTC US: AZNVF / TSX-V: MILE) is currently sitting at an absurdly low price considering the opportunity. Often the share price of a company does not reveal its potential — which is how we normally find value. COVID has impacted Last Mile Holdings but the company is positioned to surge and I expect more news flow. I believe this stock is a steal at the current price.

If you believe in social and sustainable investing… If you like companies with patents, contracts, permits and licensing agreements… then this is a potential gem.

If you believe that electric is the way of the future, and if you believe young people are more conscious of the environment, then this could be the company for you. Invest in a value company that has values aligned with yours. A company that is coiled to spring us forward into a cleaner and more compassionate future.

 

 

This is the quick glimpse of our ever-changing world. We all know how fast life is changing — it can be both upsetting and unsettling. This is a solution we all want to see: effective and efficient movement that is aligning our social concerns and our love of the planet with our need to travel the ever-growing cities we inhabit.

As always, please do your own due diligence before making any investment.

 


Andrew O’Donnell, Contributor
for Investors News Service

 

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DISCLOSURE: Last Mile Holdings is an Andrew O’Donnell portfolio holding. Andrew has a sponsorship / paid contract in place with Last Mile Holdings to add investor awareness.

DISCLAIMER: Investing in any securities is highly speculative. Please be sure to always do your own due diligence before making any investment decisions. Read our full disclaimer here.

Published November 2020


Sources:

[1] https://www.washingtonpost.com/news/innovations/wp/2014/05/27/ubers-remarkable-growth-could-end-the-era-of-poorly-paid-cab-drivers/?utm_term=.3fba08b44ac3

[2] https://qz.com/890139/uber-is-paying-the-ftc-20-million-for-misleading-drivers-about-how-much-they-really-make//P>

[3] https://www.businessinsider.com/uber-lyft-driver-how-much-money-2019-10/P>

[4] https://nymag.com/intelligencer/2019/04/ubers-plan-to-lose-money-on-each-ride-make-it-up-in-volume.html/P>

[5] https://www.globenewswire.com/news-release/2020/05/27/2039590/0/en/E-Bike-Market-Size-to-Reach-USD-46-04-Billion-by-2026-Growing-Inclination-towards-Energy-efficient-Bikes-to-Favor-Growth-states-Fortune-Business-Insights.html

[6] https://www.telegraph.co.uk/news/2020/03/06/traffic-means-rush-hour-lasts-day/

Andrew O’Donnell

Andrew O’Donnell is Founder and Managing Director of Supercharged Stocks, a financial media site that bridges the gap between family office, funds, investors, and public companies. Throughout his career, Mr. O’Donnell has worked at various levels of the financial industry at reputable companies such as Standard Life, RBC and Merrill Lynch. Andrew has made it his mission to seek out innovative, interesting market opportunities.