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Transportation-as-a-Service (TaaS) is revolutionizing the way we move, and it’s attracting attention in the world of investing. With the transportation industry undergoing a tech-driven transformation, a new breed of companies is emerging, offering efficient and innovative mobility services. These TaaS providers are disrupting traditional transportation models, and their stocks are becoming increasingly attractive investment opportunities.

Key Takeaways:

• The TaaS sector offers attractive investment opportunities, driven by disruptive growth potential, innovative business models, and long-term megatrends.
• Diversification within the TaaS space is key, with a range of companies offering ride-hailing, food delivery, car rental, and even space tourism services.
• Market leaders like Uber and Lyft have strong brand recognition and network effects, while disruptors like DoorDash and EHang bring innovative technologies to the table.
• Car rental companies Hertz and Avis Budget Group are embracing the TaaS model with subscription services and digital transformations.
• Virgin Galactic, although a riskier play, offers a unique value proposition in the emerging space tourism industry.

Understanding TaaS Stocks

What is TaaS?

Transportation-as-a-Service (TaaS) refers to the shift from personally owned modes of transportation towards mobility solutions that are consumed as a service. This encompasses a wide range of transportation services that are provided on-demand, including:

• Ride-hailing (e.g. Uber, Lyft)
• Car-sharing (e.g. Zipcar)
• Bike and scooter rentals
• Autonomous vehicles
• Drone delivery

The key idea behind TaaS is that instead of owning a vehicle, users can access transportation on an as-needed basis, paying only for the trips or services they use. This model offers increased flexibility and convenience for users, while also having the potential to reduce traffic congestion, parking requirements, and carbon emissions in cities.

How TaaS Companies Operate:

TaaS companies leverage technology platforms to connect users with transportation services in real-time. Here’s a general overview of how they operate:

1. Users download a mobile app or access a website to request transportation services
2. The platform matches users with available vehicles/drivers
3. GPS tracking allows users to see the location of their ride and estimated time of arrival
4. Payment is processed through the app, eliminating the need for cash transactions
5. User reviews and ratings help maintain quality control and trust in the platform

Different TaaS companies may specialize in certain types of vehicles (cars vs. scooters), service models (ride-hailing vs. car-sharing), or target markets (consumers vs. businesses). But the core principle of using technology to provide on-demand access to transportation remains central across the industry.

TaaS Market Growth:

• The global TaaS market was valued at $1.51 billion in 2023 and is expected to reach $5.83 billion by 2032, growing at a CAGR of 16.2%. introspectivemarketresearch
• The TaaS market size was estimated at $4.54 billion in 2023 and is projected to grow at a CAGR of 14.0% from 2024 to 2030, reaching $11.38 billion by 2030. grandviewresearch

Performance Comparison of Top TaaS Stocks

7 Best TaaS Stocks to Buy in 2024

With the TaaS industry rapidly expanding, there are many promising companies for investors to consider. Here are 9 top stocks that are well-positioned to benefit from the growth of TaaS in 2024: The companies we have listed are based on hedge fund interest, using data from Insider Monkey’s Q2 2024 report.

1. Uber Technologies Inc. (NYSE: UBER)

Number of Hedge Fund Holders (Q2 2024): 146

Uber is a global leader in ride-hailing and on-demand mobility services. With a presence in over 10,500 cities worldwide, Uber has revolutionized the way people move with its convenient and accessible ride-sharing platform. Beyond ride-hailing, Uber has diversified its offerings to include:

• Uber Eats: A food delivery service that has seen significant growth, particularly during the pandemic, and now has a strong presence worldwide.
• Uber Freight: A digital platform that connects carriers and shippers, streamlining the freight transportation process.
• Micromobility Solutions: Uber has expanded into e-scooter and bike-sharing services, providing last-mile connectivity options for users.

Uber Technologies Inc. reported strong results for the first quarter of 2024, with significant growth in both its Mobility and Delivery segments. Mobility Gross Bookings increased by 25% year-over-year to $18.7 billion, while Delivery Gross Bookings grew 18% to $17.7 billion. The company’s overall revenue reached $10.1 billion, driven by increased trip volumes and platform usage.

The platform’s user base expanded considerably, with Monthly Active Platform Consumers (MAPCs) growing 15% to 149 million. Trips on the platform increased by 21% year-over-year, totaling 2.6 billion. Uber continued to support its earners, with drivers and couriers earning an aggregate $16.6 billion during the quarter, up 22% from the previous year.

According to insidermonkey, Altimeter Capital Management, led by Brad Gerstner, holds 13.5 million shares of Uber Technologies Inc. (NYSE: UBER), valued at $982.3 million.

Uber has launched Uber Car Seat in partnership with Nuna, offering a convenient solution for parents and caregivers. This new service eliminates the need to bring personal car seats, simplifying travel for families.

The company has also expanded its grocery delivery services, partnering with various merchants in the US and Canada. Additionally, Uber Direct has formed new partnerships for medication and white-label delivery services across the UK, Japan, Germany, and Spain.

According to Wall Street Analyst on UBER stock. Of the 53 analysts following the stock, 42 give it a Buy and 6 has it at Hold.

Why We Picked Uber Technologies:

• Dominant Market Position: Uber enjoys a strong brand presence and a large market share in the ride-hailing space, with a network effect that attracts both riders and drivers.
• Diverse Revenue Streams: The company’s expansion into multiple TaaS segments, including food delivery and freight, reduces reliance on ride-hailing and provides new growth avenues.
• Innovation Focus: Uber continues to invest in cutting-edge technologies, including autonomous vehicles, with the potential to revolutionize the transportation industry further.

2. Lyft Inc. (NASDAQ: LYFT)

Number of Hedge Fund Holders (Q2 2024): 53

Lyft is Uber’s main competitor in the North American ride-hailing market, with a significant presence in the United States and Canada. Lyft has focused on providing an intuitive and user-friendly platform, emphasizing safety and community. In recent years, they’ve expanded their offerings to include:

• Lyft Delivery: Leveraging their network of drivers, Lyft has launched on-demand delivery services, enabling businesses to offer same-day delivery to customers.
• Lyft Bikes and Scooters: Similar to Uber, they’ve entered the micromobility space, providing bike and scooter sharing services in select cities.
• Lyft Rentals: A car rental service that provides users with access to vehicles for longer periods, complementing their ride-hailing offerings.

Lyft Inc. reported robust first-quarter results for 2024, with Gross Bookings reaching $3.7 billion, a 21% year-over-year increase. Revenue climbed 28% to $1.3 billion, while the net loss narrowed significantly to $31.5 million from $187.6 million in the same quarter last year. The company’s Adjusted EBITDA improved to $59.4 million, with a margin of 1.6% of Gross Bookings.

Rides increased by 23% year-over-year to 188 million, indicating strong demand across various use cases. Active Riders grew by 12% to 21.9 million, reflecting improved rider retention and an influx of new users. The company’s Driver Earnings Commitment, launched in February, has positively impacted drivers’ perceptions of pay fairness.

According to insidermonkey, Appaloosa Management LP, led by David Tepper, holds 8 million shares of Lyft Inc. (NASDAQ: LYFT), valued at $112.3 million.

Lyft expanded its Women+ Connect feature nationwide, resulting in a 24% increase in women and non-binary driver activations. The company also saw strong growth in Canada, doubling rides and more than doubling new rider activations and driver hours in Q1 year-on-year. Lyft Media experienced significant growth, with revenue increasing by about 250% year-over-year.

According to Wall Street Analyst on LYFT stock. Of the 44 analysts following the stock, 14 give it a Buy and 28 has it at Hold and 1 calls it a Sell.

Why We Picked Lyft:

• Strong Domestic Focus: Lyft’s concentration on the North American market gives it a localized advantage, with a better understanding of rider preferences and regulations.
• Community-Centric Approach: The company’s focus on safety, community, and social initiatives resonates with users and can drive long-term loyalty.
• Recovery Potential: After a challenging 2020 due to the pandemic, Lyft is well-positioned for a strong recovery as mobility rebounds and its diverse offerings gain traction.

3. DoorDash Inc. (NYSE: DASH)

Number of Hedge Fund Holders (Q2 2024): 67

DoorDash is a leading food delivery platform, connecting customers with local and national restaurants, as well as grocery and convenience stores. With a focus on logistics and efficient delivery, DoorDash has become a go-to platform for on-demand food and grocery needs. Key aspects of their business include:

• Wide Selection: DoorDash offers one of the largest selections of restaurants and stores on its platform, providing users with a vast array of choices.
• DashPass Subscription: Their subscription service, DashPass, provides members with unlimited free delivery from eligible restaurants, driving customer loyalty.
• DoorDash Drive: This service offers on-demand delivery solutions for businesses, enabling them to outsource their delivery logistics to DoorDash’s network of couriers.

DoorDash reported strong growth in its first quarter of 2024, with Total Orders increasing 21% year-over-year to 620 million and Marketplace Gross Order Value (GOV) rising 21% to $19.2 billion. Revenue climbed 23% to $2.5 billion, driven primarily by the increase in Marketplace GOV. The company believes it gained category share in its U.S. restaurant and new verticals marketplaces, as well as in most international markets.

Adjusted EBITDA reached an all-time high of $371 million, up from $204 million in Q1 2023. This improvement was attributed to revenue growth and disciplined fixed cost management. The company’s GAAP net loss including redeemable non-controlling interests narrowed to $25 million, compared to $162 million in the same quarter last year.

According to insidermonkey, Viking Global, led by Andreas Halvorsen, holds 5.5 million shares of DoorDash Inc. (NYSE: DASH), valued at $602.2 million.

DoorDash demonstrated strong cash generation, with net cash provided by operating activities of $553 million and Free Cash Flow of $487 million in Q1 2024. These figures represent significant increases from $397 million and $316 million, respectively, in Q1 2023, underlining the company’s improving financial position and operational efficiency.

According to Wall Street Analyst on DASH stock. Of the 43 analysts following the stock, 22 give it a Buy and 17 has it at Hold.

Why We Picked DoorDash:

• Market Leadership: DoorDash is the leading food delivery platform in the United States, with a strong market share and a growing presence in other countries.
• Pandemic Tailwinds: The shift towards online food ordering and delivery has benefited DoorDash, and these habits are expected to persist post-pandemic.
• Continuous Innovation: DoorDash continuously enhances its platform with new features, such as group ordering and improved order tracking, to maintain its competitive edge.

4. Hertz Global Holdings Inc. (NASDAQ: HTZ)

Number of Hedge Fund Holders (Q2 2024): 41

Hertz is a well-known name in the car rental industry, providing vehicle rental and leasing services across the globe. With a large fleet of vehicles and a strong presence at airports and travel destinations, Hertz has adapted to the TaaS era with:

• Hertz Rent a Car: Their core rental car business provides travelers with convenient and flexible transportation options, with a range of vehicle choices.
• Hertz Subscription Services: Hertz has introduced subscription plans, offering customers an alternative to traditional car ownership with all-inclusive monthly packages.
• Hertz My Car: This service allows customers to rent a car by the hour or day, providing a more affordable and flexible option for short-term needs.

Hertz Global Holdings reported mixed results for the first quarter of 2024. Revenue increased 2% year-over-year to $2.1 billion, driven by a 9% rise in transaction days, particularly in leisure and rideshare segments. However, revenue per day (RPD) declined 7% to $56.68, though this moderated to a 3% decrease by March.

The company expanded its EV disposition plan, aiming to sell 30,000 EVs in 2024. This resulted in a $195 million charge to vehicle depreciation for writing down EV inventory to fair value. Overall vehicle depreciation increased significantly by $588 million, or $339 per unit, due to lower estimated residual values and disposition losses on ICE vehicles.

According to insidermonkey, Knighthead Capital, founded by Tom Wagner and Ara Cohen, holds 181.5 million shares of Hertz Global Holdings Inc. (NASDAQ: HTZ), valued at $640.5 million.

Adjusted Corporate EBITDA was negative $567 million, primarily due to the sharp increase in vehicle depreciation. Direct operating expenses per transaction day rose 3% year-over-year, reflecting inflationary pressures and higher collision and damage costs. Hertz has initiated a fleet refresh and implemented revenue and cost measures to improve future profitability.

According to Wall Street Analyst on HTZ stock. Of the 9 analysts following the stock, 7 has it at Hold and 1 calls it a Sell.

Why We Picked Hertz Global Holdings:

• Established Brand: Hertz has a strong brand recognition and a long history in the car rental industry, with a loyal customer base.
• Recovery Potential: The company is well-positioned to benefit from the rebound in travel and a return to pre-pandemic mobility levels.
• Innovation Focus: Hertz is embracing the TaaS model with subscription services and partnerships with autonomous vehicle companies, indicating a forward-thinking approach.

5. Avis Budget Group Inc. (NASDAQ: CAR)

Number of Hedge Fund Holders (Q2 2024): 33

Avis Budget Group is another prominent player in the car rental industry, offering vehicle rental and leasing services in approximately 180 countries. With a focus on convenience and customer service, Avis has enhanced its TaaS offerings with:

• Avis Now: This service allows customers to choose and reserve a car through their mobile app, providing a seamless and contactless rental experience.
• Avis on Demand: Providing hourly and daily car rental options, Avis on Demand gives customers flexible access to vehicles for short-term needs.
• Avis Flex: A unique long-term rental program that offers customers the flexibility to extend their rental periods, with all the benefits of traditional leasing.

Avis Budget Group reported flat revenues of $2.551 billion for the first quarter of 2024, compared to $2.557 billion in the same period last year. However, the company experienced a significant downturn in profitability, with a net loss of $113 million, contrasting sharply with a net income of $312 million in Q1 2023. This resulted in a loss per share of $3.21, compared to earnings of $7.72 per share in the previous year.

The company’s Adjusted EBITDA plummeted by 98% to $12 million, down from $535 million in Q1 2023. This decline was primarily driven by a 91% decrease in the Americas segment and a 130% drop in the International segment. The Americas segment saw a 1% decrease in revenue, while the International segment experienced a 3% increase.

According to insidermonkey, SRS Investment Management, led by Karthik Sarma, holds a $1,791 million stake in Avis Budget Group, comprising 17.1 million shares.

Despite the financial challenges, Avis Budget Group reported a 5% increase in total rental days to 40,052,000. However, revenue per day decreased by 5% to $63.69. The company’s average rental fleet grew by 7% to 667,384 vehicles, but vehicle utilization decreased by 2.5 percentage points to 65.9%. Notably, per-unit fleet costs per month more than doubled, rising 124% to $318.

According to Wall Street Analyst on CAR stock. Of the 8 analysts following the stock, 6 give it a Buy and 2 has it at Hold.

Why We Picked Avis Budget Group:

• Global Presence: Avis has a strong international footprint, serving customers in key travel destinations worldwide.
• Digital Transformation: The company is investing in digital technologies and streamlining the rental process, enhancing the customer experience.
• Cost-Effective Options: Avis’s range of rental and subscription plans cater to cost-conscious consumers, particularly in a challenging economic environment.

6. Virgin Galactic Holdings Inc. (NYSE: SPCE)

Number of Hedge Fund Holders (Q2 2024): 5

Virgin Galactic is a pioneer in the emerging space tourism industry, developing spacecraft and launch systems to provide suborbital flights to space enthusiasts and researchers. As a unique TaaS play, Virgin Galactic offers:

• Space Tourism: The company’s flagship offering, providing customers with the opportunity to experience space travel and weightlessness, with tickets starting at $450,000.
• Scientific Research: Virgin Galactic also caters to scientific research, offering payload services and microgravity experiments on its flights.
• Future Expansion: The company has plans for point-to-point hypersonic travel, which could revolutionize long-distance travel on Earth.

Virgin Galactic Holdings reported mixed financial results for the first quarter of 2024. Revenue increased to $2 million from $0.4 million in Q1 2023, driven by commercial spaceflight and membership fees. The company’s net loss narrowed to $102 million from $159 million, primarily due to lower operating expenses and increased interest income.

The company maintained a strong cash position with $867 million in cash, cash equivalents, and marketable securities as of March 31, 2024. Operating expenses decreased significantly, with GAAP total operating expenses at $113 million compared to $164 million in Q1 2023. Free cash flow improved slightly to -$126 million from -$139 million in the same period last year.

According to insidermonkey, Graham Capital Management, led by Kenneth Tropin, holds a $26.1 million put position on Virgin Galactic, involving 3.1 million shares.

Looking ahead, Virgin Galactic’s spaceship final assembly facility in Arizona is on track to open in summer 2024. The company expects its Delta Class spaceships to enter revenue service in 2026 as scheduled. With the first two Delta Class spaceships and VMS Eve, the company anticipates supporting up to 125 flights per year, potentially generating an annualized revenue of $450 million.

According to Wall Street Analyst on SPCE stock. Of the 9 analysts following the stock, 2 give it a Buy, 4 has it at Hold and 2 calls it a Sell.

Why We Picked Virgin Galactic Holdings:

• First Mover Advantage: Virgin Galactic is at the forefront of space tourism, with a unique and exciting value proposition.
• High-Value Proposition: Space tourism caters to a niche market with high-ticket prices, potentially leading to strong revenue generation.
• Brand Power: Backed by the Virgin Group, the company has strong brand recognition and a reputation for innovation.

7. EHang Holdings Ltd. (NASDAQ: EH)

Number of Hedge Fund Holders (Q2 2024): 7

EHang is a Chinese company leading the way in autonomous aerial vehicles (AAVs) and urban air mobility (UAM). They develop and manufacture AAVs for a range of applications, including passenger and logistics transportation. EHang’s key offerings include:

• Passenger Transportation: EHang’s AAVs can carry passengers autonomously, providing a safe, efficient, and eco-friendly way to commute.
• Air Logistics: Their AAVs are also designed for last-mile delivery and logistics, offering a faster and more direct alternative to ground transportation.
• Air Medical Services: EHang has developed AAVs for medical emergency response, enabling rapid transport of medical supplies and personnel.

EHang Holdings reported strong financial results for Q1 2024, with total revenues soaring 178% year-over-year to RMB61.7 million (US$8.5 million). The company significantly reduced its operating loss and adjusted net loss, demonstrating improved operational efficiency. EHang achieved positive cash flow from operations for the second consecutive quarter, while maintaining a solid cash position of RMB323.8 million (US$44.9 million).

The company’s EH216 series product sales more than doubled compared to Q1 2023, with 26 units delivered. EHang secured a Production Certificate from CAAC, paving the way for mass production of the EH216-S. The company also expanded its presence in China, securing a conditional purchase order for 100 units in Wuxi and extending its UAM project to Shenzhen’s Luohu District.

According to insidermonkey, Citadel Investment Group, led by Ken Griffin, maintains a $5 million put position on EHang Holdings, covering 0.37 million shares.

Internationally, EHang made significant strides. The company formed strategic partnerships in the UAE, delivering five units and completing debut flights. In Spain, EHang partnered with Telefónica Tech, while in Latin America, it conducted the EH216-S’s debut flight. The company also continued to develop its presence in Japan, establishing a UAM center and conducting ongoing flights.

According to Wall Street Analyst on EH stock. Of the 7 analysts following the stock, 5 give it a Buy and 1 has it at Hold.

As EHang continues to innovate in electric aerial vehicles, advancements in battery technology, such as quantum glass batteries, could potentially revolutionize the industry. (Learn more about quantum glass battery stocks)

Why We Picked EHang Holdings:

• Innovative Technology: EHang is at the forefront of AAV technology, with the potential to revolutionize short-distance travel and logistics.
• Regulatory Tailwinds: The company has received regulatory approvals in China and is working closely with authorities worldwide to shape the future of urban air mobility.
• Diverse Use Cases: EHang’s AAVs have a range of applications, from passenger transport to emergency response, indicating a broad addressable market.

Conclusion

The TaaS sector is an exciting and dynamic space, offering investors the opportunity to capitalize on the transformation of the transportation industry. With a range of companies providing innovative mobility solutions, the TaaS stocks highlighted in this guide present compelling investment opportunities for 2024 and beyond.

While TaaS represents a significant investment opportunity, investors interested in diversifying their portfolio may also want to explore other emerging sectors with high growth potential. (Explore top marijuana stocks to buy)

FAQs

1. What does TaaS stand for?

TaaS stands for “Transportation-as-a-Service.” It refers to the shift from personally owned modes of transportation towards mobility solutions that are consumed as a service.

2. What are some examples of TaaS?

Examples of TaaS include ride-hailing services like Uber and Lyft, car-sharing platforms like Zipcar, bike and scooter rentals, autonomous vehicles, and drone delivery services.

3. How big is the TaaS market expected to be?

The global TaaS market is projected to reach $40.1 billion by 2030, growing at a CAGR of 32.2% between 2024 and 2030 (verifiedmarketreports).

4.What are some of the key drivers of TaaS adoption?

Some of the key drivers of TaaS adoption include:

1. Urbanization and increasing traffic congestion in cities
2. Rising fuel costs and environmental concerns
3. Growth of the sharing economy and on-demand services
4. Advancements in autonomous vehicle, drone, and EV technology
5. Changing consumer preferences, especially among younger generations

5. What are the risks of investing in TaaS stocks?

The main risks of investing in TaaS stocks include:

1. Market volatility, as many TaaS companies are still in the early growth stages
2. Regulatory risks, as changes in regulations can impact a company’s business model
3. Intense competition in the TaaS space
4. Technological risks, as the industry is heavily dependent on emerging technologies
5. Execution risks, as companies need to scale their operations and achieve profitability