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3 Better Stock Values Than Lyft at $23 Billion

By Rick Munarriz – Updated Apr 17, 2019 at 2:48PM

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The ridesharing service is now a $23 billion company, but MercadoLibre, Shopify, and Sirius XM could be better buys at similar market caps.

The wait is over, and Lyft (LYFT -3.36%) finally began trading on Friday. It was a surprisingly uneventful debut for the country's second largest ridesharing service. Lyft went public at $72 and opened nicely higher, but by the end of the day it closed just 8.7% above its IPO price. 

Lyft now commands a market cap of nearly $23 billion, and bulls will argue that Lyft is worth more. It's growing faster than Uber, its larger rival, and revenue more than doubled to $2.2 billion last year. Bears will counter that Lyft's heady growth is coming at the expense of margin-reducing discounts, with its annual deficit widening to a jaw-dropping $911.3 million in 2018.

Lyft is unlikely to stay a $23 billion company for long. Until the market decides it should shift into drive or reverse, there are some more compelling values with market caps around where Lyft is now. Let's go over why MercadoLibre (MELI -1.89%), Shopify (SHOP -1.77%), and Sirius XM Radio (SIRI 0.00%) may be better buys than Lyft. 

Four people in a simulated car with a Lyft logo.

Image source: Lyft.

MercadoLibre: $22.2 billion

Lyft is discounting its service aggressively, and it's still a distant second in this country's car-hailing market. MercadoLibre, on the other hand, is the leading online marketplace operator through Latin America. 

MercadoLibre isn't growing as quickly as Lyft. Revenue rose nearly 20% in its latest quarter. However, MercadoLibre is dominant in its niche, and its MercadoPago payment platform is growing even faster. MercadoLibre is also typically profitable, something that didn't work out last year but should right itself in 2019.  

Shopify: $23 billion

Canada's Shopify has become another e-commerce darling. More than 820,000 merchants and counting are flocking to its platform that lets folks quickly populate items for sale across various online outlets. 

The catalysts are everywhere for Shopify these days. Its partnership with a few Canadian provinces made it a player when the country legalized recreational marijuana for adults late last year, and the entrepreneurial bug is biting folks enamored by the opportunity to seamlessly sell to the world. Lyft lets folks use their cars -- an asset that's dormant 95% of the time -- to make money, and Shopify lets folks sell online without having to get behind the wheel to log the miles. 

Check out the latest earnings call transcripts for the companies we cover.

Sirius XM: $26.9 billion 

The lone North American provider of satellite radio isn't growing as quickly as Lyft, Shopify, or even MercadoLibre, but that doesn't mean Sirius XM isn't worth a slightly larger market cap than the other three stocks. Sirius XM has grown its audience to more than 34 million subscribers, including probably many Lyft drivers.

Top-line growth has slowed to 5% for Sirius XM, but it's consistently profitable. If Lyft with its $911 million loss is intimidating, consider Sirius XM is generating roughly $1.5 billion in free cash flow every year. Sirius XM closed on its purchase of Pandora earlier this year, and it only had to give up 8% of its company to make it happen. Sirius XM with Pandora will be able to reach a wider base of users, and that will make it more valuable to advertisers or to cross-sell platforms. 

Lyft may be growing quickly as the silver medalist in its field, but MercadoLibre, Shopify, and Sirius XM offer more dominant market positions. They all pack market caps in the mid-$20 billions, but like Lyft, these stocks also won't remain parked here. 

Rick Munarriz has a position in Sirius XM Radio. The Motley Fool owns shares of and recommends MercadoLibre, Shopify, and Sirius XM Radio. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Sirius XM Holdings Inc. Stock Quote
Sirius XM Holdings Inc.
$5.81 (0.00%) $0.00
Mercadolibre, Inc. Stock Quote
Mercadolibre, Inc.
$799.58 (-1.89%) $-15.43
Shopify Inc. Stock Quote
Shopify Inc.
$28.25 (-1.77%) $0.51
Lyft, Inc. Stock Quote
Lyft, Inc.
$13.52 (-3.36%) $0.47

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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