(Bloomberg) -- Ride-hailing firms Uber Technologies Inc. and Lyft Inc. have fared much worse than their technology peers amid the broad-based market selloff sparked by the novel coronavirus outbreak. But some Wall Street analysts are now spotting an opportunity.
Shares of the two companies had initially proved resilient as investors expected them to do well when people were avoiding public transportation in the first days of the virus scare. Later, the stocks nosedived as the crisis deepened, with several countries and hundreds of U.S. cities and companies encouraging people to limit commuting altogether and avoid stepping outside unless absolutely necessary.
Lyft shares are down 56% since Feb. 19, when the broader market peaked, while Uber is down 51%. In comparison, the Nasdaq Internet Index has fallen 26% over the same period.
“While Uber and Lyft hit new lows as movement overall grinds to a halt and the march to profitability becomes clouded, we fundamentally believe that ride-sharing only gets stronger as we recover and we would take advantage of these lows,” JMP analyst Ronald Josey wrote in a note to clients Monday.
“We believe ride-sharing can account for significantly more than the current >1% of miles driven in the next 3-5 years,” he said.
Times like these have the potential to fundamentally change consumer behavior, the analyst added. Engagement and usage across the internet are expected to increase, particularly among social networks, Josey added.
RBC Capital Markets analyst Mark Mahaney expects the two companies to be only modestly affected in a virus-driven recession, “as they are more transportation utilities than travel apps, with Uber in particular seeing stay-at-home benefits in its Eats segment.”
Read more: Uber, Lyft Nosedive as More People Stay at Home Amid Virus Fears
To contact the reporter on this story: Esha Dey in New York at edey@bloomberg.net
To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Scott Schnipper
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