Under the anachronistic protocols of the analog era, most people found themselves living by the same tired mantra: get good grades, go to a competitive college and earn your way into a high-paying job. The problem is, traditional employment is awfully unfulfilling, particularly for millennials who aspire for something more meaningful. That’s where the concept of betting on sharing economy stocks becomes quite appealing.
Usually defined in clinical terms such as collaborative consumption or peer-to-peer based sharing, one of the core tenets of the underlying industry is the maximization of underutilized assets. Mainly, when people think about sharing economy stocks, their mind resorts to ride-hailing platforms, which makes perfect sense. Generally speaking, evidence suggests that cars sit parked 95% of the time. Why not make use of this grossly inefficient asset?
Further, the concept of sharing economy stocks applies to real estate as well. Whether it’s your own property or a large commercial building, not every sheltered space finds efficient use. During my time working for and with Global 500 companies, I witnessed several open spaces just waiting to be put to some utility. As collaboration becomes the norm, such circumstances should become the exception, not the rule.
Also, sharing economy stocks don’t necessarily have to involve inanimate tangible assets. For instance, you may have a talent that might not translate into superior office work, which involves looking at spreadsheets all day anyways. Therefore, some of the best market opportunities could involve remote-learning marketplaces where individuals can share their skills or knowledge base to people demanding such attributes.
As well, let’s just consider some hard numbers. Back in 2014, the sharing economy amounted to a valuation of $14 billion. By 2025, experts in the field project that this market segment will jump to $335 billion. Therefore, anybody seeking to keep their portfolio relevant for the long haul should consider these sharing economy stocks.
- Uber (NYSE:UBER)
- Lyft (NASDAQ:LYFT)
- DoorDash (NYSE:DASH)
- WeWork (NYSE:WE)
- Funding Circle (OTCMKTS:FDCHF)
- Udemy (NASDAQ:UDMY)
- Sharing Economy International (OTCMKTS:SEII)
Finally, the Covid-19 pandemic sparked many unforeseen developments, one of them being the possible viability of sharing economy stocks. With so many people rediscovering what’s truly important in life, many have decided that sitting in a cubicle for eight hours a day isn’t it. Therefore, it’s not unreasonable to see significant demand for these “collaborative” businesses.
Sharing Economy Stocks: Uber (UBER)
Arguably the company that started the craze for sharing economy stocks, Uber doesn’t exactly stand out as a strong investment based purely on its financials. While the company posted robust net income in 2018, the ride-sharing giant has largely printed a sea of red ink. Still, its top-line growth pre-pandemic has been impressive and following a blip in 2020, it could perform well in the years ahead.
Mainly, Uber is one of the sharing economy stocks to consider adding to your portfolio based on its overriding relevance. Primarily, the company is known for its core ride-sharing business. Of course, that came under assault due to the Covid-19 pandemic. However, Uber shifted to its food-delivery service Uber Eats, providing more opportunities for drivers.
Better yet, as the gig economy expands, I anticipate that UBER stock will benefit from keen investor interest. Unlike a salaried position, with gig workers, time truly is money. Thus, it’s likely that these independent contractors will outsource needs not central to their business, which includes food deliveries.
According to a Pew Research Center report in 2019, the number of Americans using ride-sharing apps has gone up. To no one’s surprise, the vast majority of ride-sharing users are young adults. Not only that, the younger you are, the likelier you are to have taken advantage of a service like Lyft or Uber.
But what’s really intriguing is that senior demographics (defined as 50 years or older) have also taken the plunge with ride sharing. More importantly, the biggest growth rate in use of such services have come from the 50-plus crowd, up 243% between 2015 through 2018. In contrast, those between 18 and 29 saw their representation rise by only 82% during the aforementioned period.
That should bode well for Lyft, particularly as it’s unofficially the more fiscally responsible of the two ride-sharing titans. While Lyft still prints red ink, it’s not to the same magnitude as Uber. Moreover, with the older demographic the most represented in terms of vaccinations, their willingness to go out and about could be a hidden upside catalyst fpr Lyft, making it an intriguing play among sharing economy stocks.
Sharing Economy Stocks: DoorDash (DASH)
For full disclosure, I haven’t exactly been enthralled with DoorDash. While I appreciate the distinct angle the company provides toward sharing economy stocks, the food delivery and takeout business seemed suspect because of the devastation of the Covid-19 crisis.
You’ll recall that back in 2020, we encountered headlines that 85% of independent restaurants might go out of business. While experts weren’t guaranteeing that this will be the case, that’s a huge figure to be throwing out there. Certainly, the events of the pandemic and worrying headlines colored my judgment.
Irrespective of my opinions, it behooves you to perform your due diligence on DASH and other sharing economy stocks. That said, the pandemic may have actually bolstered DoorDash and similar firms. For instance, the Wall Street Journal reported a dramatic increase in consumers taking advantage of the service.
But will the enthusiasm continue? It’s possible again because of the burgeoning gig economy. With more people choosing to be paid by contractual work, spending minimal time on non-productive tasks becomes crucial. Of course, that includes cooking for yourself, which cynically benefits DASH stock.
Simultaneously one of the most hotly anticipated initial public offerings as well as being one of the most controversial, WeWork has had quite a ride to say the least. Essentially an office space subleasing company, its profile shot skyward as management made plans for its first IPO. It didn’t go well, and I’m being ludicrously charitable with that description.
You almost can’t describe the utter implosion of the deal without dropping a few F-bombs and some choice acronyms. If you want a detailed timeline about the disastrous proceedings, Business Insider contributor Rebecca Aydin did a fantastic job. Otherwise, you can resort to a shorter account of the catastrophe courtesy of The Guardian. Among the key headwinds was the original management team’s wildly optimistic forecast for the underlying industry.
Today, you can buy equity of the revamped WeWork thanks to its business combination with a special purpose acquisition company (SPAC). While it’s fair to have concerns about the viability of office subleasing, the one difference between WeWork of 2019 and WeWork of 2021 is of course the coronavirus.
Gig workers are more passionate about their chosen professional path and many are eager to present a professional image to prospective clients. With that in mind, WE could turn out to be one of the surprisingly successful sharing economy stocks.
Sharing Economy Stocks: Funding Circle (FDCHF)
For the last three outings for sharing economy stocks, I’m going to dive into the riskier side of the spectrum, beginning with Funding Circle. A crowdfunding and peer-to-peer lending specialist, the concept is distinct from traditional lending solutions in that the source of capital is the broader community as opposed to stodgy banking institutions that may be incredibly inflexible.
In some ways, crowdfunding and P2P lending represent a win-win for all involved. On one end, banks have attracted criticism for not lending enough to small businesses. On the other end, individual investors can participate in alternative opportunities that typically only accredited private-equity investors have access to. Yes, the situation is risky but at least you have the right to object rather than that choice already being made for you in the negative.
If you think that Funding Circle has shades of cryptocurrency-related projects due to the democratization concept, you’re not that far off. However, that doesn’t mean you should jump into FDCHF stock. Tied to the U.K. market as well as being an over-the-counter equity unit, you’re going to need to conduct serious due diligence before proceeding.
As mentioned at the top, sharing economy stocks are not always tied to underutilized inanimate assets. In many cases, we humans are underutilized. For instance, if you’re an accountant, your talents in graphic design will not be relevant to your primary occupation. But rather than let a valuable skill go to waste simply because your boss won’t appreciate it, you can instead share it with the rest of the world — and make money doing so.
That’s the basic premise behind Udemy, an online education marketplace that connects students with teachers in many relevant courses. While the most popular classes involve technology-based curriculum that can help students become much more competitive in the modern workforce, you’ll find a host of interesting subjects on Udemy. From designing websites to learning how to play the guitar, you’ll never grow bored of what it has to offer.
Moreover, society itself is embracing the concept of educational technology or edtech. As I mentioned in my analysis for Benzinga, Udemy caters to students with disabilities, as the platform features schedule-flexible courses. Plus, UDMY enjoys strong institutional backing, which lends it a massive credibility boost.
Sharing Economy Stocks: Sharing Economy International (SEII)
If you’re dead set on acquiring sharing economy stocks, why not buy a company with the industry’s namesake as part of the corporate brand? That might be the only sure attribute regarding Sharing Economy International, easily the riskiest name on this list.
Priced at only 2 cents per share, you don’t want to get caught up in this mess with anything other than speculation funds. And by that, I mean with loose change you find under the sofa. I’m serious. This company could go bust in a heartbeat.
At the same time, the underlying premise is interesting. Per its website, Sharing Economy International has rebranded itself as a strategic acquirer of businesses which can bolster the sharing ecosystem. Further, with blockchain technology, management aims to connect its acquired firms through a distributed and secure operating environment.
Can this business possibly work? Honestly, I have my doubts. While blockchain protocols certainly enable decentralized finance (DeFi) applications, the rewards handed out are in cryptocurrencies. How that’s going to work with a publicly traded company is anyone’s guess.
Still, the greater fool theory could see SEII shares fly higher so it’s not completely reckless, just mostly reckless.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.