Lyft Reports Earnings, Looking Ahead To Uber

at Bloomberg dot com slash podcast. We had Lift earnings last night, UM which had guidance that was subdued, UM eclipsing the first ever profit, sort of milestone, and now we have and the shares are down significantly, and now we have Uber coming out after the bell tonight. So let's bring in man deep seeing senior tech industry analysts for Bloomberg Intelligence, to talk about, you know, what we

saw yesterday and what we expect tonight. I know that Lift had its first profit and it's popular maybe amongst the kids. For me, I'm doing like eighty dollars and Uber rides a day here and I feel like they better knock it out of the park tonight. Well, so the good thing about you know, this space is at least they're just two competitors. It's a duopoly Uber and Lift.

You contrast that with food delivery where you've got you know, five or six vendors trying to compete, uh for I would say a pretty small market at this point of time. So the print we saw it Lift had, you know, it was a mixed bag in the sense that the

bright spot was profitability, as we alluded to. But I think the whole pricing aspect of it is kind of worrisome because at the end of the day, how much can you pass on to the customers and then it starts to weigh on the volume growth, so especially LIFT customers. Isn't Lift kind of a discount Uber? Isn't that the idea? No? I I think these companies have sort of rationalized the pricing so they're not trying to compete on prices or

undercut each other. It's and and that's why I mentioned about a police So the good thing is you can have you know, two competitors, one with sixty percent share, the other one with and still both can do well. But to your point about the food delivery space being more crowded, Uber's in that too. It has Uber Eats, and I wonder, you know if Lift it's kind of like correlated with the reopening in a positive way, and right demand going up, is that going to be bad

for Uber because Uber eats demand maybe going down? Yes, Uber definitely has a tougher comp when it comes to food delivery, and you're not gonna see that sort of growth which we saw during the pandemic. So if will offset there, you know the pickup in ride sharing, and that's why they are now kind of doubling down in the freight space with this recent acquisition of Transplace. So in my mind, Uber wants to be that diversified player,

the scale player. But there aren't many revenue synergies between these businesses, Like their synergy between ride sharing and food delivery is minimal. Like these are both commodity services. You know, user still gravitate towards the Lewis price options. So I just feel Uber has a tougher kind of task in terms of convincing investors that yes, the three businesses make sense under one umbrella, and you know there will be more profitable as a result of that. But we'll see.

What is who takes lift rather than Uber? I take it because my credit card gives me ten times points on Lift. But that's basically my only rational Is there a lift black. Can you are you going to be able to get into an escalate or whatever with the lift or is lift because I've always thought lit was just like some dude's regular car, so I'm gonna go out and get in somebody's Corolla. Rather, they have tiered pricing, they have tiered service levels, and uh, that's the business models.

So they want, you know, users who are not that price sensitive to pay up and for the service, and so they are launching and that there's not a huge differentiation to Uber when it comes to the actual core business. Yeah, I mean they are both copying each other. Anytime one comes up with a better feature of the other ones copies. But again, the point is they're just two. In food, you've gotten five or six vendors all doing the same least.

We have five or six in Berlin, you know, and more specifically for pizza, I think it's called slice, Yes it is. We also have a ton of different grocery services. I don't know if you had this in New York, but I can order groceries pretty much anything you would get at the grocery store and have it at my door in ten minutes time. I mean, they are super fast,

that New York is probably too trafficky for that. You can do it in two hours, I know with Amazon and Holdings, but yeah, I mean, it takes just kind of a long time to get anywhere in Manhattan and Manhattan at least, um I want to pivot from talking about groceries and food delivery to just talking about workers and finding drivers. It's incredibly difficult for these companies right now. How much of a headwind does that create for Uber

and Lift going forward? Yeah, so Lift mentioned last night they spent about you know, five million on driver incentives, and that was a contra revenue to their top line. I guess at the end of the day, they're all competing for that same worker pool, so they have to you know, shell out the incentives because these are not employees. And I think right sharing is still a better business

from a driver's perspective. In the case of food delivery, you're getting paid lore compared to you know, the right sharing. So from a worker perspective, I think right sharing is cleaner. But you put more on the line, don't you, because you have to actually lease a car. And I remember when Uber first started, the company was only taking ten

to fifteen percent of the fair. And then you know, after you've got your GMC yukon denally XL and we're paying a thousand dollar least, all of a sudden the company said, hey, we're gonna take of your fair and it seemed incredibly unfair to me and I wouldn't as a driver, want to be put in that position. After I signed a lease, all of a sudden you tell me I'm gonna make less and less money. Yeah, so I think you're right. They can't raise the take rates

and you will see a pushback. And there is that regulatory aspect that obviously it's always a wild card, you know, where you could see more regulation. But at the end of the day, they have pulled capacity and they have the demand and that is the value out of a marketplace. So you know the fact that there are just two

marketplaces is good for right sharing as an industry. And if you've said two things in the past, like minute one, regulation and two, these aren't employees that we're talking about. This is the gig autonomy. But that's creating some problems for uber and lift as well. How how great is the regulatory risk on that front? That's a big risk. I mean with these companies, the fact that they weren't

profitable at least now they're showing profitability. And the cost side is always kind of in focus because of the high variable costs in this business. So anytime you have the prospect of more regulation, it will increase costs and that is not good for you know, sustaining the profitability. So clearly it is a big threat. But at least, you know, as long as they can maintain the top line growth and with you know, economies opening up, demand coming back, I think they should be good at least

for the next one or two years. No one knows the kind of the growth rate three or four years down the line. I think the business models will evolve. I noticed the other day I wrote down I took the subway down to Grand Central station as I was heading out to Bronxfie to look at houses, and it was empty. There was almost nobody on the subway. It was unbelievable. On the four or five six here usually

it's packed. Yes, so they have taken share from a lot of the public transportation, and the use cases for these companies keep evolving. I mean, the whole aspect of right sharing, like there isn't any sharing right now. Hopefully at at some point it will come back. But you know, these companies have evolved, and I think the use cases will emerge and that should help you know, at these uh,

these companies to maintain relevance. All right. Our producer Charlie Bulmer writs in that his seven train this week was more packed than it's ever been, So maybe I was just very off peak as I headed down to Grand Central. Man Deep, thanks very much for joining us. Man Deep Sing, senior tech industry analyst at Bloomberg Intelligence, talking to us about Uber out after the bell. This is Bloomberg. I am just looking forward to what we got going on today and we have a lot. Let's bring in Jennifer

Epstein right now, political reporter from Bloomberg News. We've got her on the line from Washington, d C. To talk. Well, there's a lot of talk about, but I guess Jennifer. The first issue is the Biden administration. The c d C eviction moratorium. It looked like it was over, and now it looks like they're extending it until October thirteenth.

Although the President himself said there's not really very strong constitutional grounds for this Yeah, it's actually October three or two months from yesterday, UM, when the CDC Director um signed this order, and it's trying to be a bit more narrow and really focused on the rise of the delta variant, and what the CDC Director says is the public health threat that comes with people potentially being evicted from their homes and then you know, ending up in

shelters or on the streets, um, where there could potentially be more spread of the virus and you might see in if people were living in their own homes. But why do they care enough today and not like Saturday? Like, why not deal with this before? Yeah, well, it certainly seems like this did come up as a bit of

a surprise for the administration. As much as they had known the deadline was coming, they were also very focused on on the infrastructure bill, and you know, it's really they seem to have also been caught a bit by surprise by the very rapid spread of the delta variant and all of that sort of created this pressure. And then at the same time time you had these uh small group of House Democrats really backed by the entirety of the House Democratic Caucus saying uh in the last

few days at the end of last week. This is something that has to be done. You have to help these people out, um, you know. And so the administration found a way to do it. It just took them a bit longer than I think that advocates and and other outside people would have liked to have seen. And it may not be constitutional. I mean, we can always find way to do things. If it's not constitutional. It's

just really not helpful, is it. Yeah. Well, the President I think is somebody who was very cautious about those things. And that's sort of why he was reluctant to just go out and announce an extension last week. Uh and kind of back in the Supreme Court, uh to it,

you know. And and he he doesn't, you know, always have the best filter for things, and so he kind of said that yesterday that this is something that might not pass muster in the courts, but it's something that the administration kind of had no choice politically but to try out. At the very least, they've bought a little bit of time, a couple of days, a couple of

weeks while this works its way uh in court. And and and the other issue here is really that the Treasury Department's efforts to get out over forty billion dollars in rental aid have been uh pretty slow so far because it's something where treasurism worth working with state and local governments, and that has all just taken a lot of time to get up and running. This money from the Recovery Act that passed in March, and they were only able to get one point five billion of that

out uh two renters in the month of June. So you know, they're hoping that that rationale that that's taken so long, which is something uh that Justice Kavanaugh did mention when he was part of uh uh the Supreme

Court uh weighing in on this. He was not actually a part of the the um major the majority ruling on this, but uh that that is something that that they are hoping that that maybe they can kind of thread the legal legal argument there and have that uh way of getting ahead of so speaking of legal arguments and what a president does or does not have power to do, obviously, at the end of the day, this

issue comes back to the pandemic. That is why there are millions of people facing the potential loss of their home. Is there anything else that President Biden has it in his power to do. In terms of the vaccination front, Yes, he's finally mandated that that federal workers need to get vaccinated or be tested all the time. But is there anything else? Yeah, I think the administration is continuing to

look for more things to do. Um. They're looking for other areas of the federal government besides sort of the executive branch employees um who are covered by by the order last week, to uh, potentially more public health kind of workers who are not necessarily a part of that initial order. I think the administration is also uh just looking at at the the approval process for the vaccines.

You know, it seems like, uh we saw Dr Fauci last night saying that could be just two weeks away from fives or getting final approval um with with the sd A. And that's something where um, the administrative the White House is going to stay out of that because they don't want there to be any appearance of of

political pressure on these public health agencies. UM. But that itself, I think would would be a pretty significant move forward because there are lots of people at least right now who are saying, I don't want to do anything until that A fully approves it, so that in of itself

could be a pretty big um move forward. And then UM, you know, I think I think the administration is just gonna kind of the for any little uh, you know, pocket of people it can get to, uh to try to to try to get more people back to native Jennifer, thanks for spending some time with us. Jennifer Epstein is Bloomberg News political reporter coming to us out of Washington, d C. Now, there has been a ton of M and A activity today alone. Um, we saw a big

uh deal in the telecom space with Apollo. We saw UM a big deal in soccer La Liga. Ten percent of that I went to CVC. Um we saw a huge like a seventeen billion dollar deal. What was that? We saw um VC no VC properties buying MGM Growth Properties seventeen point two billion dollars. And but you were pointing out Square and after pay started the week off with a bang on Monday, the biggest acquisition ever for

an Australian company twenty nine billion dollars. And I think since the beginning of July you said more than like five billion, fifty billion dollars and deals have been done, so it's a great time to bring in uh Thad Malik. He is the chair of Global Mergers and Acquisitions, the practice Global Mergence Acquisition Practice at Paul Hastings and he can talk to us about you know, this this incredible growth that thanks for joining us. Um Is this peaking now?

Is this going to slow down? Or are we just gonna look at you know, record M and A activity this year? Yeah? Thanks Matt and Kaylee. Nice to be here. Appreciate the opportunity right now. It's interesting, you've got pretty

much the perfect confluence of events for continued activity. You alluded to some of it earlier in terms of rate reviews, in terms of what people are seeing in terms of rates, but more importantly, markets don't really like uncertainty when it comes to M and A and so with some of the pandemic challenges waning and with the vaccinations increasing, that's gotten people a little less uncomfortable about what's coming down the road. And it's pretty much the perfect influence of

a ends. I think you're going to start to see a little bit of a shift and you're starting to see this on the anti trust side, Folks are starting to focus a little bit more than they have in the past, And just yesterday the FTC indicated that the crush of deals is so large that they're not able to get through their review in thirty days for some deals, and so that puts people in a little bit of limbo. But for now, I'd say we have a wary eye

trained on horizon. But things are still trending positive. But it's not even just that the deal approval process could be slow. The Biden administration has signaled that it wants to be a lot tougher on competition in general. How how much of a headwind is that to the M and A market. I think it's going to be a particular headwind for those that are in industries that they fixed their sights on. The regulators tend to follow a

pretty well worn path. They try to communicate a little bit of where they're they're coming, and you see some of that in his executive order, and particularly for the large tech companies and those that are perceived to have large market presence. I think that scrutiny is going to continue, and I think you can add on top of that prank like some of what you're seeing in terms of the sciffiest review, the foreign review of key industries and

deals in that space. So I think that is going to be a continuing challenge right now, that's probably the biggest potential disruptor that folks are looking at, but more could be coming. Well. Taxes is the other right um, at least, I'm not sure which way that pushes things, because we've seen a number of deals already, some very big deals due to the fact that private ownership saw maybe a jump in capital gains coming and wanted to

get out ahead of it. Absolutely, and one of the things that they've learned, I mean in the past when this has happening, in particular for the private equity sponsors, there's been a surge of activity to try to beet the increase. And one of the issues that they've been discussing is whether they make that sort of retroactive so to a certain extent that's got people a little I don't want to say destabilized, but again cautious about what they're looking at. So in particular for the sponsors, that

becomes a very pressing concern. What's the hottest industry right now for murger activity? Basically anything technology related, whether you call it digitization or digitalization, however you refer to it.

People are recognizing, particularly with the work from home dynamics, that they need to upgrade their systems and capabilities and anything related to technology, whether that's improving your supply chain, whether that's improving your metrics, finding new ways of generating revenue from data that your your products push off, anything that's related to that. There's a recognition that you need to be moving forward and oftentimes buying it is cheaper

than building it and certainly faster. Does it help that there is no interest rate risk here? I mean not only are rates low negative to low, but they're never going up again. Well, they the cycles tend to move in cycles, so as some point there will be the inevitable sort of come up and but no, certainly right now. That's a significant driver again for the sponsors in particular with rates being low, they can reset their expectations in terms of deals. And there's a lot of activity right now.

I mean, there's what we're seeing on the service provider side from the investment banks. What the FTC did, which is basically recognize what the service providers have been seeing. There's a lot of activity trying to get pushed through right now as quickly as possible, because people don't want to get caught, you know, catching the follow knife, so to speak, when the inevitable cycle turns. All right, Dad, thanks so much for joining us time to talk about

and it was great having you. Hopefully get you back on soon. Daddy's Malik there is the chair of Global Mergers and Acquisitions at Paul Hastings talking to us about this m and a market which has just been incredible. You know, one of the deals I forgot to mention was Betsy Cohen did another back deal today and I think she's done at least twelve billion dollars worth of Financial Services Act deal. So when you bring spacks into it, it just is an incredible market um and the growth

has been um pretty outstanding. M A go by the way, it's one of my favorite functions on the Bloomberg terminal and it's a great way to see. For example, you can click on forgo for the league table and you can see how many deals have been done year to date or in the last month of Tetra highly recommen using it. M A go. This is Bloomberg Now to

bringing Kate. Hello Global chief investment officer at Russell Investments to talk a little bit about E S G investing to us Kate, it's interesting because there are a few different ways investors can go with E S G And I guess it depends. Do you have to decide if you want to UM chase returns or make a difference. Yeah. I think it's UM the blend of financial, non financial and regulatory drivers that are making people kind of go

in one direction versus another. Yeah. I think increasingly the ability to kind of prove out that you leading in certain directions you can have a positive or at least not a negative impact on returns UM will start to kind of play through UM. But I do think there, you know, your needs to be kind of that balanced focus of that primary objective. What is it? Is it about having the impact or is it about returns just so you can calibrate how much you go in one

direction versus the other? Do we have enough data to make E S G investments? I feel like a lot of this stuff has been pretty opaque. But is that changing? Yeah, Yeah,

I think it's a great question. UM. And I think particularly on the climate side, the data availability and some of the approaches for kind of testing the impact of climate on different sectors or different types of metrics is getting a lot better and it's accelerating really quickly, and so I think a big area you know, needs to be to really stift through those different data options, test out, you know, the impact it's having on asset pricing, because

we might not see that for quite some time, but you can kind of scenario kind of test your way into different paths that you know it could take. But the data is starting to know much better quickly, particularly on the climate side. Before we get it deeper there, I want to understand outsourced ce io UM investment solutions. What exactly is that? Yeah, so it's largely defined benefit plans and diamonds and foundations and hospital the systems that

are looking to outsource their investment program. In most cases it's because they, you know, want to focus on their core competencies, maybe want to up there with mandrink game and or just have a partner to help navigate the market and the in terms of actually what we do or what the O G I oh kind of universe says, it's it's really about delivering a total solution that's customized to particular outcomes, and so it's not just stout being

a benchmark. The often it's focused on like the fundergradition for a pension or particular income needs. You know that in endowment is listening to achieve or volatility requirement, and so you're having some flexibility and how you try to solve those problems. It's part of that kind of O

C I O solution. How do you approach investing with climate specifically in mind, especially considering the green spending we're getting out of the bipart as an infrastructure plan as well as the Democratic only plan that will likely be pushed through before or after at some point, how do you how do you think about what may benefit the most? Yeah, and I think you still need to take a fairly long term view on how this is going to impact

capitalication and um and returns and asset pricing. But as you start to see some of these policies, you know, kind of shifts an actual spending linked to it, it does make it easier to start to think through the winners and losers, you know, with some of the bills that are coming through at least in the U S side, infrastructure spin and things like that that might mean a little bit more E. S G. Just helps them think about how you might want to allocate and where there's

that tackle allocation element is is starting to be decided. Um, But you know, I think that there's like there's just small pieces to hind the earlier point. All of this is still early stages, and so you know, you still need to maintain diversification in terms of how you're approaching you know, toping the portfolio, because it's not clear on kind of where this is going, and so having the frameworks and the and the tools to really kind of

understand the impact and be able to measure it. I think it's gonna be really important along the way speaking of diversification, diversity and inclusion. I mean the idea intuitively makes sense to me. Um. I was once talking to Mindy Grossman, who used to be the only woman on the board at Nike, and they apparently in a giant board meeting all turned to her and asked, how can we sell more shoes to women? And the obvious answer is, duh,

you need to have more women on the board. Um. And and that's you know, I think it makes makes sense just innately, but um, do we have enough data in in asset management that shows how important diversity is in returns. Yeah, there has been a good amount of work done both in terms of your boards, but also like investors and where you get um whether it's you know, gender related or other forms of diversity. You know, more kind of balanced and consistent returns um when you actually

have more balanced and perspectives. And so I think that they're you know, still your consistently work that needs to be done to prove that out. But you know, you even see, you know, there's there's some work that's been done multiple times. DA saying that women tend to be a little bit less action oriented in a good way. I they don't feel the need to overtrade the portfolio and try to your stick to the thesis and stick to the end of the view that they have and

more carefully think about making sifts. And so I do think that their support in the asset management worlds for having that kind of diverse idea and actually impacting and be able to have more sistant and persistent returns. Kate, we only have about twenty seconds left, but just to get your view on the market more broadly, would you want to be getting defensive or more risk on here. We're so constructive over over the next twelve months. We're

very focused on that kind of pandemic recovery trade. We're risk neutral right now, um just because of some of the volatility, but we're leaning in the cyclicals. So there it says a little bit more constructive on the markets overall. Right, right, great to get some time with you, Kate, Thanks so

much for joining us. Kate al Hillou spent years at JP Morgan at Goldman, success at Management, now Global Chief Investment Officer at Russell Investments, giving us her insight on E S G as well as diversity and inclusion, which are you know, more than just buzz buzzwords now, I think investors are are actually demanding these things. This is Bloomberg. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever

podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller nineteen seventy three. On Fall Sweeney, I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.