Uber is imploding. Is it time to invest in Lyft instead?

The past year has been non-stop bad news for Uber, the $70 billion tech "unicorn" company of the ride-sharing market. From allegations of sexual harassment within the company to an exodus of C-level talent from the company to legal battles with Alphabet subsidiary Waymo, labor disputes, and a complete and utter lack of profits, Uber has done an exceptional job of totaling itself and opening up a lane for Lyft to drive right by.

Investors may now be tempted to leave Uber stock by the curb, and buy into its archrival Lyft instead. But how exactly does one make an investment in Lyft stock? After all, both Uber and Lyft are private businesses, so technically it should be impossible to buy Lyft shares -- right?

Well, yes and no.

NY LYFT license plate image

Image source: Lyft.

Yes, like Uber, Lyft is a private business. Lyft stock is not listed on any stock market (yet), so you cannot buy it directly. The only people who own Lyft stock today are companies and employees with access to privately held shares. But there's no law saying you can't buy shares in companies that own Lyft shares, and so own Lyft stock indirectly ...

Buy General Motors

One such backer is none other than General Motors (GM -2.92%). You might think that General Motors and Lyft would be natural enemies. After all, if people shift from buying cars to hailing Lyft cabs to take them from Point A to Point B, well, that would be bad news for General Motors, right?

But GM is no dummy. They read the writing on the wall last year, and paid $500 million to snap up a 9% stake in Lyft in January 2016 -- just in case people do stop buying cars (and also, presumably, to give Lyft drivers an incentive to lease cars from GM). According to data provided by S&P Global Market Intelligence, this $500 million investment makes GM one of Lyft's largest shareholders today.

Or buy somebody else?

Nor is GM the only public company that could find itself lifted by Lyft's success. S&P Global also names publicly traded (i.e. you can buy them) Icahn Enterprises (NASDAQ: IEP), KKR & Co. (NYSE: KKR), Alliance Bernstein Global High Income Fund (NYSE: AWF), and GSV Capital Corp (NASDAQ: GSVC) as all owning stakes in Lyft. China's Alibaba (NYSE: BABA) and Tencent (NASDAQOTH: TCEHY) are also said to own stakes via their investment arms.

Still, GM's 9% stake in the company makes it by far Lyft's most prominent, publicly traded owner, and thus the most direct route to owning a sizable indirect stake in Lyft stock. Mathematically speaking, for every 11 shares of General Motors stock you buy, you can indirectly own about one share of Lyft -- before Lyft IPOs (if Lyft ever does IPO).

And buying GM stock would also be a pretty cheap way to buy a piece of Lyft stock.

Why buy GM if what you really want to own is Lyft?

Currently dogged by worries that the American auto market has hit its peak and is beginning a downturn, General Motors stock is for sale -- and it's cheap. S&P Global data show that while Wall Street analysts expect GM's earnings to take a hit this year, growth could return as early as 2018 -- and earnings growth could average as much as 13% annually over the next five years.

Not everyone agrees with this assessment. In fact, S&P Global data show some analysts predicting that GM's earnings five years out could still be as much as 17% below 2016 levels. But even if that's the case, GM would be earning more than $5 a share in 2021. This worst case scenario would value GM stock at barely 7 times earnings. That wouldn't be as cheap as General Motors stock looks today, when it's valued at only 5.5 times earnings -- but it's still not expensive.

What's more, valuing GM on its own earnings alone runs the risk of ignoring the potential payday from an IPO of Lyft. Let's run one wild-eyed scenario here:

Assume that Uber's loss is Lyft's gain, and that if Uber were to (continue to) implode, it would leave Lyft to pick up the pieces -- and the $70 billion market cap that Uber recently enjoyed. In that case, Lyft could grow more than 12 times in value from the $5.5 billion valuation it had at the time GM bought in early last year. Such a scenario would turn GM's $500 million investment into $6.4 billion, and add 12% to GM's market cap.

Pie in the sky? Maybe. But Lyft is almost certain to enjoy at least some gains from Uber's repeated self-inflicted fender-benders. And 9% of these gains will accrue to Lyft's part-owner GM. Unless and until a more direct route for investing in Lyft stock appears, buying shares of GM seems like a reasonable detour to take.