I think Lyft's stock is headed higher, says Worth Charting's Carter Worth

Key Concepts

• Rounding Bottom/Bearish to Bullish Reversal: A chart pattern indicating a potential shift from a downtrend to an uptrend.
• Downtrend Line: A line connecting a series of decreasing peaks on a stock chart, indicating a downward trend.
• Range (Trading Range): The price range within which a stock has been trading for a specific period.
• Catch-Up Trade: An investment opportunity where a stock is expected to increase in value to align with the performance of its peers or the overall market.
• Dual-Class Stock System: A corporate structure where different classes of stock have different voting rights, often giving founders or insiders disproportionate control.

Lyft Stock Analysis and Investment Thesis

1. Historical Performance and Chart Analysis (Carter Worth)

• Unmitigated Disaster: Lyft's stock performance since its IPO in March 2019 has been poor. Priced at $72, it briefly hit $89 before declining, reaching lows of around $10. It has never exceeded its initial highs.
• Rounding Bottom Formation: The recent price action suggests a "rounding bottom" or "bearish to bullish reversal" pattern, indicating a potential trend reversal.
• Breaking Downtrend Line: The stock has recently moved above a well-defined downtrend line that has been in place since its IPO.
• Trading Range: Lyft has been trading in a range of $10 to $20 for approximately four years. A move to the top of this range represents a potentially profitable trade.
• Upside Potential: Despite its past performance, the chart patterns suggest that Lyft is headed higher and could be a "catch-up trade" for the market.

2. Investment Rationale (Steve Grasso)

• Long Position: Steve Grasso is long on Lyft, having bought the stock around $14.
• Doubling Potential: Grasso believes Lyft has the potential to double in price.
• Strategic Partnerships: He highlights the Baidu JV strategic partnership in Europe for autonomous driving and the acquisition of Free Now as positive factors.
• Direct Rideshare Play: Lyft is seen as a direct play in the rideshare market, positioning it as a smaller competitor to Uber.

3. Turnaround Story (Tim Seymour)

• New Leadership and Governance: The resignation of the co-founders and the elimination of the dual-class stock system are seen as positive developments.
• Lack of Confidence: The analyst and investor community previously had little confidence in the company.
• Acronym Portfolio: Seymour has held the stock for a year and a half, indicating a long-term investment perspective.

4. Conclusion

The analysis suggests that Lyft, despite its historical underperformance, may be poised for a turnaround. Carter Worth's chart analysis points to a potential trend reversal, while Steve Grasso highlights strategic partnerships and market positioning as reasons for optimism. Tim Seymour emphasizes the importance of new leadership and governance changes in restoring investor confidence. The consensus is that Lyft could be a worthwhile investment opportunity, particularly as a "catch-up trade" in the market.