As always, hazards still exist off-and-on the price charts of Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT). But following deep corrections, is either UBER or LYFT stock worth adding to the portfolio as a bull—or hailing a ride south as a bear?
Without a doubt, recent earnings reports in rideshare operators Uber stock and Lyft didn’t go unnoticed by Wall Street. For its part, UBER delivered a headline-worthy, massive and wider-than-expected loss. Making matters worse, Uber stock also offered investors’ undesirable and seemingly out-of-control expenses as the company burned through $920 million in cash compared to the year-ago quarter.
The good news, if any, was that gross bookings for the industry giant were up handily and Uber’s top management stressed its plans to continue investing aggressively in healthy growth and is confident the company, “at maturity, can be cash-flow positive.”
On the other hand, Lyft, whose plans for global domination are still limited to the U.S. market, easily topped analyst sales and earnings forecasts while also boosting its outlook for 2019. The report’s message was enough to shift sentiment with many investors now anticipating LYFT stock could turn a profit sooner than previously expected.
Regardless of the contrasting earnings reports, the net result on the price charts of Uber stock and Lyft stock have been the same with fresh all-time-lows over the past month. The question now is whether it’s a good time to ride those bearish trends, or buy UBER and Lyft stock for the possibility of a larger and friendlier U-turn in share price?
Uber Stock Price Daily Chart
Technically and after initially hitting fresh lows by mid-August, Uber stock remains in a larger downtrend. Shares have rallied the past several sessions, but an overbought stochastic bearishly crossing over and intact price resistance near $36 make this rideshare name a short.
My advice is to wait for a modest bit of price confirmation and short Uber stock below $32.60. I’d set my sights on shares making their way to a new low of $25 for profit-taking purposes. At the same time, to avoid larger potential losses, an initial stop slightly above resistance at $36 makes sense.
Lyft Stock Price Daily Chart
Technically and much like its earnings report, Lyft stock appears to be in a stronger position than Uber. Currently shares of LYFT have narrowly reclaimed their prior all-time-low set back in May. This could ultimately result in a double-bottom pattern playing out and offer positioned bulls’ a low-risk spot to enjoy big-time profits over time.
The price chart in Lyft stock isn’t a one-way street though. Similar to Uber stock, it may be too early to ignore profiting from a downtrend which remains in place. As such, my suggestion is to put Lyft shares on the radar for going long, as well as positioning short.
For buying Lyft stock confirmation through $49.50 looks like a good spot to enter long. This entry is fractionally above LYFT’s recent two week high, as well as offers a definitive breakout above downtrend resistance.
Alternatively, in the event Lyft’s bearish trend reasserts itself, shorting stock below $45.40 should provide some beneficial momentum as shares break beneath the three day low and further below angular support which could prove to be a bear flag. More important, with either price outcome in LYFT, I’d also advise keeping bullish or bearish exposure to just under 10% and use the opposing entry as an initial stop loss for the position.
Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.
