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If you have you cash to invest then there could be some ASX shares to consider thinking about.

Here they are:

Bubs Australia Ltd (ASX: BUB)

Bubs is a business that manufactures and sells infant formula products, predominately made from goat milk. It also sells organic baby food, grass-fed cow milk infant formula and a range of vitamin and mineral supplements.

The Bubs share price is down around 25% from where it was six months ago. But the company recently provided a trading update for the quarter to December 2020 which showed that sales were recovering.

In the three months to 31 December 2020, group quarterly sales grew by 36% to $12.8 million quarter on quarter. However, sales were still 12% lower than the prior corresponding period.

The ASX share reported that its cross border e-commerce (CBEC) sales went up 27% quarter on quarter and it grew 34% compared to the prior corresponding period. Adult goat dairy gross revenue increased 45% quarter on quarter and it was up 25% over the prior year’s quarter.

Bubs’ infant nutrition portfolio, which represented 57% of the second quarter revenue, saw sales growth of 27% quarter on quarter.

The company boasted that it is the fasting growing infant formula manufacturer across Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Chemist Warehouse with combined retail scan sales at the checkout up 41% quarter on quarter and up 67% over the prior corresponding period.

The corporate daigou trade is softer than pre-COVID-19 levels, but it was up 122% quarter on quarter.

Export sales to markets outside of China continue to strengthen, with sales up 194% quarter on quarter and up 138% compared to the prior corresponding period.

Bubs thinks the quarterly turnaround in sales is a positive indicator for the long-term.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is an ASX share that services the large and medium US church sector.

It offers a variety of tools including donor tools, finance tool and a community app, as well as a church management system to the faith sector. One of the abilities of the technology is a livestreaming option, which is useful during this COVID-19 pandemic.

The company has boasted of continuing operating leverage improvements over the last 12 months, with strong processing volumes. It received better-than-expected donation volumes in December 2020, which caused the business to increase its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) guidance yet again.

EBITDAF guidance was increased again to a range of US$56 million to US$60 million, up from the previous guidance range of US$54 million to US$58 million.

The company also recently advised that it has allocated an initial investment of resources into developing and enhancing the customer proposition for the Catholic segment of the US faith sector. The ASX share said that focused investment into the Catholic segment represents a significant milestone.

At the current Pushpay share price, it’s valued at 23x FY23’s estimated earnings according to Commsec.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

This is an exchange-traded fund (ETF) which looks to provide exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar’s equity research team.

VanEck, the ETF’s provider, says that this portfolio has a high conviction strategy with US shares. The businesses within the ETF are ones that the research outfit believes has a ‘wide economic moat’ after going through Morningstar’s share research process. Target companies must be trading at attractive valuations, relative to Morningstar’s estimate of fair value.

The ASX share gives Aussies exposure to a portfolio of US-listed businesses including: John Wiley & Sons, Charles Schwab, Corteva, Cheniere Energy, Wells Fargo, Blackbaud, Intel, Bank of America, Biogen and Constellation Brands.

It has an annual management fee of 0.49% per annum.

Over the last five years the average total return per annum of VanEck Vectors Morningstar Wide Moat ETF has been just over 17%.

More reading

• Leading brokers name 3 ASX shares to sell today
• 3 great ASX tech shares to buy
• Got money to invest? Here are 2 ASX shares to buy
• 2 top ETFs to buy next week
• 2 fantastic ETFs to buy for strong potential returns

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended BUBS AUST FPO, PUSHPAY FPO NZX, and VanEck Vectors Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On its first day of listing on the ASX, BikeExchange Ptd Ltd (ASX: BEX) shares jumped 23.1% to a high of 32 cents. However, at the time of writing, the BikeExchange share price has retreated to 26.75 cents, up 2.9% for the day so far.

The company raised $20 million at an issue price of 26 cents per share as part of its initial public offering (IPO). The raising valued the company at a market capitalisation of $76.9 million.

BikeExchange bills itself as a global marketplace for all things bike. Its online cycling marketplace enables brands, retailers and distributors to connect with customers around the world.

And this morning’s BikeExchange share price action, at a time when the All Ordinaries Index (ASX: XAO) is down 0.6% for the day, implies many investors believe in the potential of the newly listed company.

Growth potential in global cycling

BikeExchange operates across eight markets in Australia, Europe, North America and Latin America. According to the company, its addressable global market is over $83 billion.

BikeExchange hosts more 1,500 brands, 1,450 retailers and 600,000 products. It reaches 29 million consumers each year. Globally, the company reported that its marketplace generated over $1.5 billion in sales leads and enquiries value (annualised) in the first half of the 2021 financial year.

Commenting on today’s ASX listing, global CEO Mark Watkin said:

Today marks a significant milestone for our business, from its humble beginnings as a concept 14 years ago, to now being a leading global marketplace for all things bike. Our initial public offering will help us to scale our business and support future growth. Cycling, in addition to sport and recreation, is playing an increasing role in mobility and transport globally, as infrastructure and behaviours change…

The funds raised from our initial public offering will be invested in growth initiatives, such as: strategies to convert existing sales leads on our site to e-commerce transactions, increasing the retailer, brand accounts and key partnerships on site, and improving the customer experience through technology and products.

New strategic partnership for BikeExchange

In a busy day for the newly listed BikeExchange, the company also announced a strategic partnership with Latin America-based Auteco Mobility. Auteco is the leading Colombian motorcycle assembler and electric vehicle distributor.

BikeExchange says Auteco’s knowledge and network will help scale its business in Colombia and other Latin American countries. BikeExchange has been operating in Columbia since 2017.

Addressing the new strategic partnership, Auteco Mobility board member Daniel Vásquez said:

We believe bicycles will continue to grow in relevance and revolutionise urban transportation as cities world-wide realize the benefits of favouring bicycles over other means of transport, and BikeExchange is uniquely positioned to capture the growth in this trend.

More reading

• How I’d identify the best shares to buy in a stock market recovery
• The Little Green Pharma (ASX:LGP) share price has dived 16% today. Here’s why
• Leading brokers name 3 ASX shares to sell today
• How CEP Energy ‘world’s largest battery’ will shake up the energy market
• Why Challenger, DEXUS, Emeco, & Zip shares are tumbling lower

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Finding the best shares to buy in a stock market recovery can be a challenging task. After all, forecasts are very dependent on the economic outlook, which itself is likely to be heavily impacted by coronavirus.

However, by investing money in financially-sound businesses that have long-term growth potential while they trade at low prices, an investor could reduce their risks and increase their potential rewards.

Financial strength is key to long-term performance

The past performance of equity markets suggests that a long-term stock market recovery is likely to continue in the coming years. Even if there are downturns in the meantime, the stock market has always produced new record highs after each of its previous bear markets.

However, companies must be able to survive present economic difficulties in order to benefit from a period of growth in the long run. As such, identifying those businesses that have large cash positions, modest amounts of debt and access to liquidity should it be required could be a shrewd move. They may stand a better chance of surviving the short-term challenges that continue to face many sectors to benefit from improved operating conditions and stronger investor sentiment in the coming years.

Low valuations ahead of a stock market recovery

In a stock market recovery, the best performing shares are often those companies that previously traded at low prices. They have greater scope to deliver capital gains, since they trade at a larger discount to intrinsic value.

As such, buying undervalued stocks today could be a profitable long-term move. They can be found by, for example, looking at the value of their net assets versus share prices, or by considering their earnings track record in a variety of operating conditions. This may provide guidance as to whether they have the capacity to trade significantly higher in the long run. In cases where they seem to offer wide margins of safety, there may be opportunities to deliver market-beating performance.

Identifying potential growth opportunities

It is difficult to assess the prospects for any stock at the present time. Ultimately, nobody knows how the economy will perform due to the ongoing pandemic. Furthermore, the financial cost of the pandemic remains unclear, which could have an impact on growth opportunities within many industries.

However, buying companies that may benefit from underlying industry growth trends could be worthwhile ahead of a stock market recovery. For example, healthcare companies may capitalise on demographic changes such as an ageing population in future. Equally, online retailers may use digital growth opportunities to enhance their earning capacity.

Through purchasing such companies when they have solid finances and trade at low prices, it is possible to capitalise on a long-term market rally. This could improve an investor’s financial position in the coming years.

More reading

• The Little Green Pharma (ASX:LGP) share price has dived 16% today. Here’s why
• Leading brokers name 3 ASX shares to sell today
• How CEP Energy ‘world’s largest battery’ will shake up the energy market
• Why Challenger, DEXUS, Emeco, & Zip shares are tumbling lower
• Why the Dexus (ASX:DXS) share price is slipping today

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Little Green Pharma Ltd (ASX: LGP) share price has fallen more than 16% this morning after the company announced a $22 million share placement. At the time of writing, the Little Green Pharma share price is trading at 78 cents, down 16.58%.

What’s driving the Little Green Pharma share price?

Yesterday, the company announced its first exports of cannabis flower medicines to Germany. Little Green Pharma has manufactured Australian medical-grade cannabis products since August 2018.

The company today advised it has received ‘firm commitments’ to raise approximately $22 million (before costs). This will be executed via a share placement program for sophisticated, experienced and professional investors.

The company will issue a total of 34 million new fully paid ordinary shares at the price of 65 cents a share. Currently, Little Green Pharma has 82.6 million shares outstanding and a market capitalisation of $77.2 million. 

An additional share purchase plan to raise up to $5 million will also be offered to eligible shareholders, also at a fixed price of 65 cents per share.

Little Green Pharma will use the proceeds to accelerate sales and marketing activities, expand its cultivation and manufacturing capacity, and provide general working capital.

Here’s why company executives are confident 

Regardless of the Little Green Pharma share price taking a 16% hit today, the company remains optimistic about its future.

Here’s what managing director Fleta Solomon had to say about the upcoming share placement:

We’re highly encouraged by the strong support shown by new and existing shareholders for Little Green Pharma.

Little Green Pharma has gone from strength to strength, and has achieved immense growth in the last year, most recently setting new records for quarterly revenue, unit sales, and patient numbers. We expect the next 12 months to be very exciting for the company and look forward to reporting on our continued success.

The Little Green Pharma share price has rocketed up by around 122% over the past 12 months.

More reading

• Why the Little Green Pharma (ASX:LGP) share price will be on watch today
• Little Green Pharma (ASX:LGP) share price whiskers near all-time high
• What does the Biden administration mean for ASX shares? 

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX shares:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of Citi, its analysts have retained their sell rating and cut the price target on this infant formula and fresh milk company’s shares to $9.40. The broker expects the company to continue to struggle in the second half of FY 2021 due to ongoing weakness in the daigou channel and a resurgence in Chinese infant formula brands. It appears concerned these pressures could be structural. Incidentally, for similar reasons, the broker has reaffirmed its sell rating and 51 cents price target on Bubs Australia Ltd (ASX: BUB) shares. The a2 Milk share price is currently fetching $10.45.

Cochlear Limited (ASX: COH)

Analysts at UBS have retained their sell rating and $175.00 price target on this hearing solutions company’s shares. According to the note, the broker expects the company to report a sizeable decline in sales during the first half. This is due to foreign exchange and COVID-19 headwinds. Unfortunately, it notes that the latter isn’t easing as quickly as the company might like, which could delay the rebound in sales until FY 2022 or beyond. The Cochlear share price is trading at $206.86 today.

Medibank Private Ltd (ASX: MPL)

A note out of the Macquarie equities desk reveals that its analysts have retained their underperform rating and $2.70 price target on this private health insurance company’s shares. This follows Medibank’s investment in the Myhealth Medical Group last week. While the broker sees strategic value in the non-controlling acquisition over the long term, it isn’t enough for a change of rating right now. Macquarie remains bearish due to structural pressures and concerns over a catch up of claims. The Medibank share price is trading at $2.95 this afternoon.

More reading

• What to expect from the a2 Milk (ASX:A2M) half year result
• 2 exciting mid-cap ASX shares to buy and hold
• Got money to invest? Here are 2 ASX shares to buy
• Brokers name 2 ASX blue chips to buy
• Here’s why the Medibank (ASX:MPL) share price is edging higher today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO and Cochlear Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia has recommended BUBS AUST FPO and Cochlear Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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When Elon Musk’s Tesla Inc (NASDAQ: TSLA) was commissioned to build the largest battery our country (and the world) had ever seen in 2017, it made waves around the globe. Tesla was a company at the forefront of innovation. The announcement signified the largest upgrade to Australia’s national electricity grid in decades.

In the years since, it has proven a success. So much so that a private company CEP Energy is looking to do one better in New South Wales.

According to a report in the Australian Financial Review (AFR) today, Kurri Kurri in the NSW Hunter Valley is set to become the recipient of the latest ‘largest battery in the world’. According to the report, the battery will be commissioned by CEP Energy. CEP is chaired by former NSW premier Morris Iemma. CEP will build a battery up to eight times as large as Tesla battery in South Australia. It will have an estimated capacity of up to 1,200 megawatts at an estimated cost of $2.4 billion.

The battery will be operational by 2023 if everything proceeds as planned. The AFR reports that the project is being “backed by CEP’s private investors and some as-yet-unidentified institutional investors”.

The AFR quotes CEP chief executive Peter Wright as stating the following on the project:

[High-level feasibility work] shows strong commercial support for a really decent-sized battery system there…We certainly have access to capital, so there won’t be a capital constraint, but the ultimate sizing comes down to what is most appropriate in terms of market need… The grid capacity is there and we believe the business case is there…. The wind is at our backs and we’re confident we can achieve something within a reasonable timeframe.

CEP battery plans shake up ASX energy retailers

According to the AFR, the project “looks set to undermine” the plans of the ASX’s largest energy retailers like AGL Energy Limited (ASX: AGL) and Origin Energy Ltd (ASX: ORG). AGL has plans to build a new gas-fired power plant in NSW. The new battery may be large enough to undermine demand for base-load power that any new gas power plant would provide.

AGL’s ageing Liddell coal-fired power plant is also scheduled for full decommissioning in 2023. So this new battery could inadvertently fill a gap in the energy market by coming online at a similar time. This view is backed up by comments to the AFR from Mr Iemma:

Big batteries, including the one planned by CEP Energy for the Hunter, will play a major role in filling the gaps left by the gradual retirement of coal and gas-fired generation assets, including the nearby Liddell power station.

That could explain why the AGL share price is down another 2.06% today to $10.95. Not only is that share price a new 52-week low, but it’s the lowest price AGL has commanded since the depths of the global financial crisis back in 2008.

More reading

• Bitcoin skyrockets to a new all-time high after Tesla invests $1.5 billion in the popular cryptocurrency
• Should short selling be banned?
• Top brokers name 3 ASX shares to sell next week
• 5 things to watch on the ASX 200 on Friday
• ASX 200 falls 0.9%, Nick Scali reports, Vulcan jumps

Sebastian Bowen owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In afternoon trade on Tuesday, the S&P/ASX 200 Index (ASX: XJO) is on course to record a disappointing decline. At the time of writing, the benchmark index is down 0.5% to 6,845.1 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are tumbling lower:

Challenger Ltd (ASX: CGF)

The Challenger share price has crashed 13.5% lower to $6.24 following the release of its half year results. For the first half of FY 2021, Challenger reported a 12% increase in annuity sales to $2.2 billion and a 10% lift in total life sales to $3.4 billion. However, despite the sales growth, normalised net profit before tax (NPBT) fell 30% to $196 million.

DEXUS Property Group (ASX: DXS)

The DEXUS share price has fallen 3% to $8.47. Investors have been selling the property company’s shares following the release of its half year results. DEXUS reported a half year net profit after tax of $442.9 million. This was down 55.5% on the prior corresponding period due primarily to net revaluation gains being lower than those recognised a year earlier.

Emeco Holdings Limited (ASX: EHL)

The Emeco share price is down 9% to $1.13. This follows the release of the equipment rental company’s half year update. Although Emeco reported a 21.1% increase in revenue to $298.6 million, its net profit fell by a massive 87.7% to $3.3 million.

Zip Co Ltd (ASX: Z1P)

The Zip share price is down 2% to $9.62. At one stage today the buy now pay later provider’s shares were down as much as 6.5% before recovering slightly. This appears to have been driven by profit taking after some very strong gains in recent weeks. In fact, prior to today, the Zip share price was up a remarkable 75% since the start of the year. This impressive gain was driven largely by a very strong quarterly update last month.

More reading

• Why the Dexus (ASX:DXS) share price is slipping today
• ASX 200 down 0.4%: Macquarie impresses, Challenger disappoints, & Suncorp rises
• Why did the Emeco (ASX:EHL) share price take a 10% dive today?
• Why the Challenger (ASX:CGF) share price is tumbling 6% lower today
• Will LimePay IPO drive ASX BNPL shares even higher?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Dexus Property Group (ASX: DXS) share price is dipping today following the release of mixed first-half results for FY21.

At the time of writing, shares in the leading Australian real estate group are swapping hands for $8.50, down 2.75%.

How did Dexus perform?

For the period ending 31 December 2020, Dexus reported net profit after tax (NPAT) of $442.9 million. The result was a 55.5% decrease from the prior corresponding period due to net revaluation gains of investment properties. External auditors independently valued a total of 111 of 122 of Dexus’ office and industrial properties.

Adjusted funds from operations (AFFO) and distribution stood at 28.8 cents per security. This represented an increase of 7.1% and 6.7%, respectively, over the same time last year. The lift in AFFO and distribution was attributed to increased trading profits of $47.1 million.

Dexus experienced relatively strong rent collection with 96% of its entire portfolio paying on time. It noted that during the period, management focused on cash collection while ensuring the stability of its small-to-medium-sized business customers.

The company advised it has a healthy balance sheet of $1.7 billion in cash and undrawn debt facilities.

What did management say?

Dexus CEO Darren Steinberg commented on the company’s results:

Despite the widespread impact of the pandemic, the first half of FY21 has been characterised by increased leasing activity, relatively strong rent collections, initiatives to grow our funds management business and the selective recycling of assets.

Our high-quality portfolio, the strength of investment demand for quality assets, and our platform capabilities will enable us to drive performance in this next stage of the real estate cycle.

Outlook

Looking ahead, the company will seek to expand revenue streams as COVID-19 may continue to linger for some time. While working from home has impacted revenues, Dexus believes that the office sector is needed for running business operations.

The company expects its full-year distribution per security to remain in line with the previous year of 50.3 cents. However, it stated that the forecast could change depending on renewed lockdowns or unforeseen circumstances.

About the Dexus share price

During March 2020, the Dexus share price was hit hard when government restrictions enforced widespread lockdowns. The company’s shares fell from a 52-week high of $13.51 to a multi-year low of $8.03 in August – the time when the Victoria government introduced stage 4 restrictions.

Based on the current share price, Dexus commands a market capitalisation of roughly $9.3 billion.

More reading

• 5 things to watch on the ASX 200 next week
• Why the DEXUS (ASX:DXS) share price just got upgraded by a top broker
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At lunch on Tuesday the S&P/ASX 200 Index (ASX: XJO) has failed to follow the lead of US markets and is dropping lower. The benchmark index is currently down 0.4% to 6,854.3 points.

Here’s what is happening on the market today:

Macquarie update impresses

The Macquarie Group Ltd (ASX: MQG) share price is jumping higher today after investors responded very positively to the release of its third quarter update. According to the update, Macquarie experienced improvements in trading across its business during the three months ended 31 December. This led to growth across both its annuity-style businesses and markets-facing businesses compared to the prior corresponding period. Looking ahead, management expects to report a full year profit result slightly down on FY 2020.

Challenger disappoints

The Challenger Ltd (ASX: CGF) share price is sinking lower today following the release of its half year results. For the six months ended 31 December, Challenger reported annuity sales of $2.2 billion and total life sales of $3.4 billion. This was a 12% and 10% increase, respectively, over the prior corresponding period. Despite the sales growth, Challenger reported a normalised net profit before tax (NPBT) of $196 million, down 30% on the same period last year. This fell short of the market’s expectations.

Suncorp half year results

The Suncorp Group Ltd (ASX: SUN) share price is pushing higher today after delivering a better than expected half year result. For the six months ended 31 December, Suncorp reported a 39.5% increase in half year cash profit to $509 million. This allowed the Suncorp board to declare a fully franked interim dividend of 26 cents per share.

Best and worst ASX 200 performers

The worst performer on the ASX 200 on Tuesday by some distance is the Challenger share price with an 11% decline. This follows its half year update. The best performer has been the Macquarie share price with a 7% gain following its stronger than expected quarterly update.

More reading

• Why Douugh, Macquarie, Starpharma, & Suncorp shares are storming higher
• Here’s why the Macquarie (ASX:MQG) share price is surging 7% higher
• Why the Challenger (ASX:CGF) share price is tumbling 6% lower today
• Real reporting season surprise isn’t about profits but dividends
• Why the Suncorp (ASX:SUN) share price is in focus

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

If you’re a fan of (or more importantly an investor in) ridesharing services, this is a week to make sure that you’re awake at the wheel. Lyft Inc (NASDAQ: LYFT) reports its fourth-quarter results shortly after the close on Tuesday. Larger rival Uber Technologies Inc (NYSE: UBER) pulls over for its fresh financials the following day.

Lyft and Uber seem to be joined at the hip in the eyes of Wall Street. They are the two undisputed leaders in the US car-hailing market. They also went public just five weeks apart in the springtime of 2019. But pop open the hoods, and you’ll find two different engines in action. Lyft will take some time to warm up in the new normal, but Uber should impress you.

Lyft you higher

Lyft was the first of the two ride-hailing platforms to go public, and since it reports first this week, we may as well start there. The coronavirus pandemic has naturally hit the personal mobility market hard. With more people working, learning, and playing at home to contain the spread of the COVID-19 virus, demand has dropped sharply since mid-March of last year.

As the smaller of the two players, Lyft stood out when it hit the market by growing a lot faster than Uber. Lyft’s business has also been the harder hit of the two companies on the way down. We’ve seen revenue at Lyft decline 61% in the second quarter of last year, the first full period under the grip of the pandemic. The top line took a 48% year-over-year hit in the third quarter. Analysts see that improving marginally to a 45% decline when it reports on Tuesday afternoon.

The climate is getting kinder, but for now, the problem is the temporary pause on conventional ride-pooling. UberPool and Lyft’s shared-ride feature were suspended in March of last year. The ride-pooling was a win-win for the platforms. Riders willing to share a car with others going in the same direction would receive lower fares. Drivers would make more money by lumping overlapping routes in the same vehicle. This doesn’t fly in the new normal, where strangers shouldn’t be sharing the backseat even if they are donning the now-required masks.

The market’s been kind. Despite the brutal year, Lyft shares moved 14% higher in 2020, and the stock enters this trading week 23% higher than where it was at the start of last year. Investors assume we will resume our ridesharing ways as the vaccination rollout gnaws away at the pandemic as 2021 plays out. For now, expect another sharp quarterly deficit to accompany the 45% revenue hit on Tuesday.

Super Uber

Investors will get a very different report out of Uber after the market close on Wednesday. It’s expected to follow Lyft in posting a quarterly loss that is narrower than the same period a year earlier, but analysts see a mere 12% decline in revenue. 

The difference here is that Uber has emerged as the country’s second-largest player in restaurant delivery. We’re not hailing rides these days, but with indoor dining unsafe (if not entirely off the menu), there’s been an explosion in the popularity of third-party apps that pick up takeout orders and bring them to hungry customers. 

Uber’s third quarter is a perfect illustration of the state of things. Uber’s 18% decline in revenue for the period – way kinder than Lyft’s 48% slide – was the combination of a 53% drop in passenger rides that was largely offset by a 125% increase for Uber Eats. It works. It’s why Uber stock has trounced Lyft, nearly doubling (up 97%) since the beginning of last year. 

It’s not just Uber Eats that is helping the larger of the two players, which now trades at a much higher revenue multiple than Lyft. Uber is an international player, and many overseas markets are closer to bouncing back to pre-pandemic levels. Both stocks should be growing their top lines again at some point later this year, but right now Uber is the one that’s shining brighter than Lyft.  

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Rick Munarriz has no position in any of the stocks mentioned.  The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Uber Technologies. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Uber and Lyft: A tale of two earnings reports appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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