The coronavirus from China is no longer a foreign event that’s causing headaches for the supply chain of big U.S. tech stocks. It has hit home. Apple (NASDAQ:AAPL) has gone from iPhone 11 shortages to the indefinite closure of U.S. Apple stores. A national emergency has been called in the face of what is now a pandemic. The border to Canada is closed. Companies are asking employees to work from home, while restaurants and bars are closing.
From an investment perspective, the past several weeks has been wretched, with multiple record-setting losses. No sector has escaped unscathed, but some companies are faring better than others. Here’s a look at how three gig economy stocks are performing, along with their prospects should the coronavirus crisis in the U.S. turn into an extended event.
Gig Economy Stocks to Watch: Lyft (LYFT)
Lyft (NASDAQ:LYFT) has been positioning itself as the “kinder and gentler” ride-sharing service.
From cars that were once equipped with whimsical pink moustaches (now replaced by less glaring pink dashboard lighting), to transparency in its pricing, Lyft has tried to appeal to consumers who found competing ride-sharing services intimidating. It was also the first ride-sharing app to go public, holding its initial public offering in March 2019.
With bets on scooters and autonomous car technology in addition to its core ride-sharing app, Lyft is nowhere near profitability. LYFT stock ended 2019 down 45%, and it has been battered during the coronavirus crisis. After closing at $44.70 on Feb. 21, LYFT closed on Wednesday at $16.05, for a 64% loss in under a month. That slide reflects the overall market punishment, but also the grim reality that Lyft finds itself in: with people working from home, not allowed to travel and not going out at night, ride-sharing requests are plummeting.
The company is scrambling to find additional services its drivers could perform. It’s also agreeing to “provide funds” to sick drivers — a move that is winning some kudos, but will add to its expenses. According to Business Insider, it’s considering delivery of food, or medical supplies. With the potential for the coronavirus crisis in the U.S. to extend into months, Lyft needs to do something to keep its revenue from collapsing. And profitability is further away than ever.
Uber (NASDAQ:UBER), like Lyft, also held its IPO last year (in May), but ended up closing the year down roughly 13%.
The company now finds itself in a similar position to Lyft, with a ride-sharing model that’s being eviscerated by the coronavirus pandemic. Uber will also be compensating its drivers if they are unable to work because of coronavirus contact or diagnosis. In the latest blow to ride-sharing, on March 17 Uber (and Lyft) announced they were suspending their carpooling options in the name of social distancing.
UBER stock has been falling in near lock-step with LYFT, also posting a 64% loss since Feb. 21.
The difference for Uber may be its food delivery service, Uber Eats. Demand for food delivery is expected to spike, with restaurants reduced to take-out service and grocery shopping something people are doing as little as possible. Unfortunately, Uber Eats also currently loses money. More business will mean additional revenue, but may actually widen Uber’s losses.
In short, at best the coronavirus pandemic will seriously jeopardize Uber’s goal of turning a profit by Q4 2020. At worst, it could see UBER stock continue its nosedive.
One gig economy stock that may actually see some benefit from the coronavirus is Grubhub (NYSE:GRUB).
Food delivery has become increasingly popular. In January, it had increased 41% year over year, with Grubhub placing second among America’s food delivery services by sales. However, as InvestorPlace contributor Dana Blankenhorn points out, analysts had been souring on GRUB stock before the recent market crashes. Increased competition was taking a toll. As a result, GRUB started 2020 at just $47.24 after topping $146 in 2018.
However, as a pure food delivery play, Grubhub has weathered the current market turmoil better than Lyft or Uber. Currently at $35.85, GRUB is down 36% compared to the 64% hit the other two gig economy stocks have suffered.
The fact that restaurants are shutting down dining rooms and turning to delivery to survive is working in Grubhub’s favor. Also in its favor is the fact that it’s the dominant food delivery service in New York City. That’s a huge market, and currently one of the areas hardest hit by the coronavirus.
There is nothing that we can be certain of in this time of unprecedented crisis. However, if you’re looking for a gig economy stock with a chance of weathering an extended coronavirus pandemic, GRUB stock appears better positioned than Uber or Lyft.
Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015. As of this writing, he did not hold a position in any of the aforementioned securities.