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- New Street analyst Pierre Ferragu thinks a merger between Lyft Inc (NASDAQ:LYFT) and DoorDash Inc (NYSE:DASH) would drive a 30% upside to the combined company’s long-term EBITDA.
- Ferragu says combining the businesses would keep drivers busier, allowing them to make more money while also reducing the cost of finding new customers.
- The combination of food delivery and ride-sharing paid off for Uber Technologies Inc (NYSE:UBER) and Grab Holdings Inc (NASDAQ:GRAB). He saw the same hold good for DoorDash and Lyft combo.
- Ferragu sees the merger as a substantial competitive advantage to attract drivers in a supply-constrained environment.
- The timing of demand for mobility and delivery is complimentary, with ride demand highest during commuting hours but food delivery heaviest at lunch and dinnertime.
- He also sees consumers increasingly take rides and order food from the same platform with increasing loyalty.
- Ferragu notes that Uber acquired twice as many delivery users from its rides app than its paid channels at 25% of the cost.
- According to him, multi-platform companies are becoming more profitable and defending market shares better.