We recently compiled a list of the 10 Best TaaS Stocks to Invest in According to Hedge Funds. In this article, we are going to take a look at where Lyft, Inc. (NASDAQ:LYFT) stands against the other TaaS stocks.
Market experts opine that the transportation world is surrounded by tech-infused transformation, which creates significant opportunities for investors to go long on TaaS (transportation-as-a-service) stocks. The digital transformation that is being experienced by the transportation sector continues to make delivery services more accessible and customized.
As per Introspective Market Research, factors including the need for on-demand, affordable, and eco-friendly transport solutions are expected to drive the growth of the transportation-as-a-service market.
Technological advancements including self-driving cars are some of the prominent factors, with healthy improvement in connectivity. Smart cities and the application of loT, primarily in the transportation sector, should also act as contributing factors.
How Technological Advancements Will Drive Growth of the TaaS Market?
The TaaS market saw a transformative shift over the recent past, courtesy of the integration of Artificial Intelligence (Al) and Machine Learning (ML). Al-powered systems tend to optimize fleet operations by analyzing real-time and historical data, predicting vehicle demand, and suggesting efficient routes. ML algorithms focus on analyzing user behavior, preferences, and travel history to offer recommendations. Therefore, both the technologies, Al and ML, have transformed demand forecasting and predictive analytics.
As per Successive Digital, deep learning models, mainly Recurrent Neural Networks (RNNs) and Long Short-Term Memory (LSTM) networks, are proficient enough to capture temporal dependencies in data, which helps in demand forecasting. Notably, ML models like ARIMA (Autoregressive Integrated Moving Average) and Prophet are used to predict future demand by studying time-series data.
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Key Trends to Watch Out in 2025
One of the most important trends likely to drive the growth of the TaaS market in 2025 is the rapid adoption of EVs. The global push towards sustainability continues to support the growth of the EV market. Introspective Market Research believes that stringent emission standards set by governments and incentives provided for EVs continue to support the adoption. Furthermore, the development of battery systems focused on enhancing the driving range and cutting down the cost of EVs should make them affordable to consumers.
Next, Mobility as a Service (MaaS) integration should continue to fuel growth in the TaaS market. MaaS platforms focus on the convenience of users by offering a one-stop app where people can locate modes of transport such as buses, trains, bicycles, ride-hailing, etc. As per Introspective Market Research, the evolution of digital technologies like real-time data and analytics, mobile applications, and loT supported the growth of MaaS. These technologies focus on integrating and managing different forms of transport services.
Our Methodology
To list the 10 Best TaaS Stocks to Invest in According to Hedge Funds, we conducted extensive research and scanned through several online rankings. After getting an initial list of 25-30 stocks, we filtered out the ones having high hedge fund holdings. Finally, the shortlisted ones were ranked in ascending order of their hedge fund sentiment, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A ridesharing passenger and driver in a car, looking out the window in anticipation of their destination.
Lyft, Inc. (NASDAQ:LYFT)
Number of Hedge Fund Holders: 51
Lyft, Inc. (NASDAQ:LYFT) operates a peer-to-peer marketplace for on-demand ridesharing in the US and Canada. The company operates a peer-to-peer marketplace for ridesharing, allowing users to request rides via its app. These are then fulfilled by a network of drivers using their personal vehicles. Thus, the company provides on-demand transportation without the need for vehicle ownership.
Lyft, Inc. (NASDAQ:LYFT) continues to focus on product innovations targeted at increasing rider growth and frequency. These include the introduction of new features such as Price Lock, which focuses on retaining and acquiring customers by offering predictable pricing. Wall Street believes that this innovation should result in increased user adoption and ride frequency. Furthermore, Lyft, Inc. (NASDAQ:LYFT) introduced 33 new products and features in 2024 and plans to enhance its service offerings.
Next, Lyft, Inc. (NASDAQ:LYFT)’s focus on strengthening its ride-sharing business should drive long-term growth. The company plans to introduce autonomous vehicles next year. Furthermore, it plans to establish partnerships with Mobileye Global and May Mobility. The introduction of AVs will eliminate the need for human drivers, reducing labor costs, one of the significant expenses in Lyft, Inc. (NASDAQ:LYFT)’s current ride-hailing model. With lower operating costs, the company can offer more competitive pricing.
This should attract price-sensitive customers and enhance its market share. Furthermore, autonomous fleets can be scaled more easily. This can help in expansion into new markets and growth in user engagement. As a result of this growth, Lyft, Inc. (NASDAQ:LYFT) can also enhance its take rates, which measure the percentage of revenue the company retains after paying drivers.
Overall LYFT ranks 3rd on our list of the best TaaS stocks to invest in according to hedge funds. While we acknowledge the potential of LYFT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than LYFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.