On Tesla buying Lyft…

Hey everyone, me Kevin here. We're on a

boat to where are we going? Alcatra.

We're going to Alcatraz. So, uh there's

San Francisco. I don't know if you can

see. Yeah, you can see that pretty well.

But anyway, uh I wanted to talk about

the strategy of potentially Lyft being

acquired by Tesla. Few things to know.

Quick facts. It's selling for about a

one peg, potentially even under a one

peg. It's kind of always been sort of

the stepchild of Uber. Uber sells for

about a 26x market cap multiple to Lyft.

Now, obviously, Lyft has a substantially

uh lower revenue base than Uber has, but

when we think about what a Lyft

acquisition at $7 billion could

potentially do for Tesla, kind of makes

you start thinking a little bit. Tesla

obviously bobs between a $500 million

market cap to $1.5 trillion. So from a

market cap basis, if we did a stock

transaction, even at a, you know, 40%

premium, a little bit more than 40% at

say $10 billion or even 12 billion,

we're really talking about on the high

end 2% of Tesla's market cap to acquire

Lyft. Now, a lot of folks initially say,

Kevin, this is crazy. You know, Tesla

can generate their own Lyft app. They've

been able to uh build out a self-driving

stack. They've been able to build out

vehicles. They've been able to build out

Optimus robot prototypes. They've been

able to build out phenomenal vehicles uh

that, you know, I drive the Cybertruck.

Lauren's got the Model S. My father

drives my Black X. And what what you

find is that yes, Tesla's going to have

a fantastic app. I have zero concerns

about that. What I'm more concerned

with, and I think this is what

institutional investors are looking at

when it comes to Tesla, is getting the

users. See, one of the reasons Uber

sells at a premium toyft is because they

have the monthly active user base, the

people opening the app. and getting

non-Tesla investors, everyday drivers or

riders I should say to actually use the

Tesla app might take a a lot of

advertising and b a lot of habit

building because what usually happens

once I what usually happens with uh

users of apps is they open them if they

don't find utility those apps never get

opened again so somebody might be

inspired to use the Tesla app open the

Tesla app call for a ride closest Tesla

is 30 minutes away, they go back to

Uber, they never come back. They they're

stuck with that impression forever. And

that's a dangerous start for Tesla. Now,

I don't think that initially if we're

just launching with say a fleet of 5 to

10 vehicles like Musk has talked about.

I don't think that we're really going to

be in a place where we really need the

users day one because we're starting in

local markets like Austin. We're

starting with, you know, 5 to 10

vehicles. There'll be plenty of demand

just from Tesla investors wanting to use

those. So this doesn't have to be right

away. Lyft is just trading for I mean

it's up 28% on the last trading day

here, but it's still trading relatively

low

historically. And so it creates an

interesting opportunity where once you

scale to a national

platform, instantaneously when somebody

opens the Lyft app, you could

potentially get a Tesla robo taxi.

It would now not only eliminate a

competitor, probably the second most

popular driver app, but it now gives

Tesla one of the fastest distribution

platforms for rider demand that they can

then service with every user of, you

know, if we end up getting probably

hardware 4, hopefully not hardware 5

vehicles, right? like we we want

everybody with hardware 4 to be able to

join the FSD network uh and the robo

taxi network, but imagine if you could

immediately if you have hardware 4 or

you have hardware 3 and you get upgraded

to four, which will probably be a free

upgrade, I'm guessing. Uh Elon's

alluded, well, he's pretty much bluntly

said this in earnings calls,

then you could immediately have this

massive supply. See, again, we don't

need it on day one if we're just doing

five or 10 vehicles in Austin. But what

if you put five million, maybe not that

many, say you put two million Teslas on

the road with hardware four? Well, now

you need demand. And to build that

demand in the Tesla app itself, I think

will be very, very challenging where you

could potentially immediately have

demand for a very, very small fraction

of the market cap of what Tesla's

trading for. So, I actually think this

is a very interesting strategic

opportunity. I shout out Gary Black for

mentioning this. Everyone's favorite

Tesla investor, Ross Gerber, likes the

idea as well. Uh I saw some of their

initial ideas on uh earnings and the

valuation of Lyft. I see this as

instantaneously unlocking massive demand

for what could be a massive robo taxi

network for hardware for Teslas. Now

there is also the downside risk and

maybe the you know the the uh uh you

know executives at Tesla know this.

There is also the risk that hardware 4

is just not robo taxi capable. In which

case then only hardware five or

potentially even hardware six robo taxis

uh would be available which would be a

very very limited uh subset of vehicles

in which case you don't actually need uh

more supply of riders in other words

more ride demand because you're not

going to be able to fill it with a

broader fleet anyway. So Tesla not

trying to expand in the early launch

phase uh their their sort of pool of

available riders could be a risk that

they're not quite confident yet.

Hopefully after we get some of those

initial Austin tests done, we actually

prove the uh you know the FSD

capabilities of uh the Tesla robo taxi

very very

rapidly and before lift gets too

expensive, Tesla should make a tent

offer. My take I think it's a great

strategy especially if that's the

direction we're going unless of course

there's severe doubt inside of Tesla

that they'll ever actually get to the

robo taxi level without LAR. How many

Whimos have we seen in the time we've

been here in San Francisco? A lot. And

one um a lot. And one of them like one

place there was like five in like one

area. Yeah. I mean, look, I'm not I'm

not here to shill Whimo, but I will say

Whimo has a fivestar review app. They

have a lot of reviews. Uh they clearly

have a lot of demand out here. We saw a

Whimo going up a parking structure, like

up a ramp inside of a parking structure.

This is pretty impressive. Now, I'm not

saying Tesla can't pull that off. We

know it can. But we're completely

driverless. Uh now we know they're geo

fenced so they're mapped. There probably

some downsides uh you know that that I

think Tesla can scale much faster. But

again if you believe that Tesla can

scale so rapidly then you should

actually encourage the acquisition of

more demand because if you believe FSD

is so advanced then we want that demand

for our riders to eventually overtake

even Uber. So that's my take. What do

you think about that? Tesla robo taxis.

Cool. Would you rather be in a Tesla

robo taxi or a Whimo? Wait, what's a

robo taxi again? Self-driving Tesla. Oh,

uh, probably Tesla. Probably Tesla. So,

let me guess. You would try the Whimo,

but then go right back to the Tesla.

Uh, well, I don't really know because

I've never been in a Okay. I'm going to

take you in a Whimo today. Okay. How

about this though? What do you think?

Cybert truck or Whimo?

Let's go. Anyway, there you have it. So,

let me know what you think in the

comments down below. I know some people

are, "Oh, Tesla can build it

themselves." It's not about building the

app. Anybody can build an app. It's

about having that non-engaged, non-Tesla

investor opening up their phone and

going, "I need a ride." Boom. Lift.

That's what you need. That's the key

perspective.