Short Term Long Straddles LYFTI’m of the belief that the business model for Uber and Lyft long term is on with very thin margins and is a commoditized product. Eventually these two companies will stop marketing themselves as unique businesses and improve margins. However, as Ivan Feinseth of Tigress pointed out, as economy gets worse more riders could become drivers; therefore eroding demand and increasing supply. Lastly, the idea that “autonomous” vehicles will solve their margin is pure fantasy unless you believe Uber and Lyft aren’t comodotized. I can explain more on that later.
With that I opened a long straddle on LYFT AT 49 with 8.31.19 x date. I believe much of of the selling was due to the following:
1. Locked in owners selling Friday after the anticipated after lock down bounce was so short lived. Especially when one looks at UBER trading about 10% below their previous “holding low” while Lyft just broke their previous low Friday. If downward trend continues you could very easily see Lyft @ $40 within 2 weeks.
On the flip side, if Lyft stabaluzes for the short term one could see a rise to above Friday open by mid week. Either way the Straddle, while not killing it should return a handsome ROI by Thursday
