Move Over, Uber. Billionaire David Tepper Just Raised Appaloosa's Stake in This Other Ride-Hailing Stock By 98%.


David Tepper is a billionaire hedge fund manager known for founding the Miami-based investment firm Appaloosa Management. Back in September, he sat down for an interview with CNBC during which he expressed an outsized bullish stance on investing in China. Naturally, his comments led many investors to speculate which Chinese stocks the acclaimed investor may like.

Well, thanks to 13F filings, investors have their answer. During the September-ended quarter, Appaloosa scooped up shares in Chinese online retailers PDD Holdings and JD.com.

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While I’m intrigued by these moves, Tepper made another decision during the third quarter that I found even more curious. Namely, the billionaire bought 7.8 million shares of Uber‘s primary rival, ride-hailing platform Lyft (NASDAQ: LYFT), increasing Appaloosa’s position by 97%.

Below, I’m going to detail what may have influenced Tepper’s decision and explain why I like the purchase. More importantly, I’ll assess some valuation trends to help determine if now is an optimal time to follow Tepper’s lead and pounce on Lyft stock.

Lyft has experienced some notable challenges in recent years. For starters, the COVID-19 pandemic took a toll on the travel industry at large; meanwhile, Uber has spent the last few years turning itself into much more than a ride-hailing app.

Through a series of acquisitions, Uber has started penetrating new markets, including food and alcohol delivery. These moves have turned Uber into a more ubiquitous platform overall, specializing in convenience-as-a-service rather than just an alternative to traditional mobility options.

LYFT Revenue (Quarterly) Chart
LYFT Revenue (Quarterly) data by YCharts

In the chart above, you can see that Lyft’s growth really took a nosedive around the time of the COVID-19 pandemic (shaded in the grey bar). Since then, the trends illustrated above demonstrate that the company has quietly been executing on an impressive turnaround over the last few years.

Let’s dig into some of the finer details and explore how Lyft navigated such a challenging environment over the last few years.

A person calling for a ride on their phone.
Image source: Getty Images.

One of Lyft’s biggest recent wins is its Price Lock program, which caps prices for riders who frequently take the same rides on a recurring basis. Looked at another way, Price Lock is Lyft’s way of trying to acquire commuters on their way to work.

On the surface, I was skeptical that a campaign like this would actually work. After all, why can’t commuters just drive themselves or take public transportation such as the subway or bus?



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