A Lyft acquisition wouldn’t be clear cut – Bernstein

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The analysts said that the note is not a claim that Lyft should or shouldn’t sell, and it hasn’t heard any news, but it is important to explore the potential scenarios.

“Almost every investor conversation we have on LYFT these days lands on a discussion of whether the business could be acquired,” wrote the analysts. “Our base case is that LYFT remains an independent public entity as it operates its way out of its current situation (the reinvestment valley) under the leadership of its new CEO, David Risher.”

“That said, given recent returns and the founders stepping back, we cannot rule it out either (though we have not heard any company news to this end).”

The analysts explained that with LYFT shares having “significantly underperformed” and the company undergoing a change in leadership and multiple layoffs, “a prospective buyer could view LYFT as a bargain.”

However, “it’s not so clear-cut,” stated the analysts. “For one, what kind of deal premium would LYFT shareholders want? Buyers could have to overcome regulatory hurdles — both from an anti-trust perspective and be willing to take on gig labor regulation. LYFT is also still burning cash, which means any acquirer would have to absorb losses.”