Lyft has been stuck in Uber’s shadow for years, but now it’s got a new backseat driver: Engine Capital. The activist investor just dropped $50 million on a stake in the company and is demanding a strategic review that translates to “fix your sh*t or we’ll make you.”

(Source: Giphy) 

Simply put, Elliot Management walked, so Engine could run, which is why not surprisingly, Lyft’s stock popped 6% on the news. But, but, but… what exactly does Engine want with Lyft? Short answer: to make money. Long answer: to shake Lyft like an Etch A Sketch. 

For instance, Engine Capital is pushing for board changes, better capital allocation, and the elimination of Lyft’s dual-class share structure—which currently lets the company’s founders hold power like medieval kings, despite the stock being down more than 36% in the last year. Meaning, they want Lyft to stop acting like a friggin’ startup and more like a real business. 

(Source: Yahoo Finance) 

Now as we all know, Lyft has always been the Pepsi to Uber’s Coke, the Burger King to its McDonald’s—but now it’s facing an even bigger existential crisis. For one, it’s still dependent on human drivers—meanwhile, Uber is rolling out robotaxis with Waymo and Tesla is promising its own fleet of autonomous rides (not holding my breath for anytime soon on that one). 

Additionally, Lyft has zero international business. Unlike Uber, which is everywhere, Lyft is stuck competing in just the U.S. and Canada. Oh and, Delta just cut ties with Lyft, meaning fewer airport rides. But really, who even uses Lyft on purpose when Uber exists? LOL 

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Which is why the real question to all of this is if an activist investor can actually save Lyft or not. Of course, they all love to play corporate therapists, but even still, Lyft isn’t exactly an easy fix. Best-case scenario? Engine Capital forces some real changes, Lyft gets its act together, and maybe they find a way to make money that doesn’t involve being an Uber knockoff. Worst case? The board shrugs, nothing changes, and the stock keeps circling the drain.

For now, investors are hopeful—hence the initial 6% pop in the stock (shares are down -1.60% on the day though). But in a world where self-driving cars are coming, Uber keeps eating market share, and Lyft still has no clear strategy, activist pressure alone might not be enough to keep this ride from breaking down. In the meantime, keep an eye on this shake-up and place your bets accordingly, friends. As always stay safe and stay frosty! Until next time… 

P.S. Just when you thought our beloved congressmen couldn’t get any greasier, one Republican lawmaker decided to YOLO $175k into a stock—right before a major FDIC announcement hit. Lucky timing? Insider edge? You be the judge. We broke it all down inside last week's Stocks.News premium article—click here to check it out ASAP! 

Stocks.News holds positions in Tesla, Uber, McDonalds, Coca-Cola, and Pepsi as mentioned in the article.