In this piece, we will take a look at the 12 best TaaS stocks to buy now. For more stocks, head on over to 5 Best TaaS Stocks to Buy Now.
The transportation as a service, or TaaS, industry is another sector that has grown in popularity due to the Internet. Ridesharing is a popular means of transport these days, as it allows those unwilling or unable to own an automobile to easily commute by requesting a ride online. This is vastly different than the service offered by the taxicab industry, which could only be availed at locations where taxis were available.
In fact, the growth in TaaS has already started to make its mark across the U.S. population, since only 25% of 16 year olds in the U.S. had a driver’s license in 2016, down by more than half, or 50%, of those who had a license in 1983. Ridesharing is growing in popularity among the younger generation, and this has also led to research firms painting a bright future for the TaaS industry. Some believe the true magic of the TaaS sector lies in the fact that it is at an intersection of some of the most valuable industries these days – namely, electric vehicles, the gig economy, connectivity, and carbon neutrality. This amalgamation of the valuable sectors under a single platform can lend the TaaS sector a market opportunity of a whopping $8 trillion, according to a report.
Of course, it’s not necessary that the drop in driving licenses is explained only by a corresponding growth in ridesharing popularity. After all, some teenagers might also find that their parents are unwilling to share their vehicles with them or buy them their own cars. However, data from McKinsey shows that the ridesharing market itself is also growing strongly, lending more credence to the fact that it is the TaaS industry that is in fact causing the decline in the driving trend amongst young people. McKinsey points out that between 2020 and 2021, micro mobility trips more than doubled, and between 2017 and 2021, electronic ride hailing trips more than tripled. For those out of the loop, micro mobility refers to sharing vehicles such as bicycles – a common occurrence on university campuses.
McKinsey also quotes its survey to point out that almost two thirds of the participants polled would be willing to share their rides if it would add less than 15% to their travel time while reducing their cost. It also reveals that electronic hailing accounted for almost the entire $140 billion shared mobility market in 2019, and that the future is strong, particularly for the micro mobility sector. According to the research firm, micro mobility could grow and sit at a whopping $500 billion by the end of 2030. Some constituents of the micro mobility market are expected to add a lot of growth in the sector due to their popularity. For example, electronic scooter sharing grew massively from fewer than one million trips in 2017 to more than 160 million in 2019. Investments in the TaaS sector are booming as well, with micro mobility players attracting $7 billion in funding as of 2017 and air mobility seeing an even larger $8 billion investment as of mid 2021.
As mentioned earlier, the TaaS sector as a whole has seen valuations in not billions, but in trillions of dollars. These estimates are not one off and made by a single firm, as another market research report, this time from Precedence Research, also paints a similar picture. Using the broader transportation services market as a proxy for transportation as a service, the former was worth $7.3 trillion in 2022 and will grow at a compounded annual growth rate (CAGR) of 8.1% by 2032 to have a final value of $15.94 trillion. The transportation services market consists of a variety of firms, some of which also offer public transport services, and if the TaaS companies are able to penetrate even a fraction of this, then the outlook of the industry is quite viable.
Finally, zooming in on the current market conditions, which are hampered by high inflation and a world still recovering from the coronavirus pandemic, Uber Technologies, Inc. (NYSE:UBER)’s chief executive officer Mr. Dara Khosrowshahi sounded upbeat at the firm’s latest earnings call as he commented on both his firm’s current performance and the macroeconomic outlook by outlining:
We’ve reached several new modes phones this quarter. We crossed 2 billion quarterly trips, and our Mobility consumer base exceeded $100 million for the first time in our history. At the same time, we’re laser-focused on making Uber the best platform for earners, with over 5.4 million people earning on Uber around the world, another all-time high. Put simply, the Uber platform has never been stronger and we’re making great progress building on our platform advantage through advertising and membership.
Despite any macroeconomic uncertainty, I’m more confident than ever in our prospects. We’re entering the year with great momentum. Mobility trip growth is accelerating and Delivery remains resilient. But we are far from complacent, and we’ll continue to hold ourselves to high standards of growth and profitability to deliver yet another record year in 2023. With that, let’s open it up to questions.
Today, we’ll look at some of the best TaaS stocks that hedge funds are piling into, with the top picks being Uber Technologies, Inc. (NYSE:UBER), Lyft, Inc. (NASDAQ:LYFT), and Union Pacific Corporation (NYSE:UNP).
Our Methodology
To compile our list, we selected companies that are providing TaaS services and those that are also playing a crucial role in developing self driving and autonomous platforms for carmakers to use. These are ranked according to hedge fund sentiment courtesy of Insider Monkey’s Q4 2022 survey of 943 funds.
Best TaaS Stocks to Buy Now
12. EHang Holdings Limited (NASDAQ:EH)
Number of Hedge Fund Investors In Q4 2022: 4
EHang Holdings Limited (NASDAQ:EH) is a Chinese company that targets the air based TaaS sector. Its EHang 184 and 216 drones are capable of autonomously piloting passengers as far as 16 kilometers and have made thousands of test flights and dozens of operational flights.
As of December 2022, four of the 943 hedge funds covered by Insider Monkey had invested in EHang Holdings Limited (NASDAQ:EH). Out of these, the firm’s largest investor is Paul Marshall and Ian Wace’s Marshall Wace LLP which owns 49,913 shares that are worth $428,253.
11. Luminar Technologies, Inc. (NASDAQ:LAZR)
Number of Hedge Fund Investors In Q4 2022: 17
Luminar Technologies, Inc. (NASDAQ:LAZR) is an American company headquartered in Orlando, Florida. The firm provides a wide variety of products for self driving cars and other vehicles. These include image sensors, range sensors, chips, and software products.
JPMorgan raised the firm’s share price target to $20 from $15 in March 2023, outlining that Luminar Technologies, Inc. (NASDAQ:LAZR)’s recent investor day had left the bank impressed with its product ramp up. Insider Monkey’s Q4 2022 survey of 943 hedge funds revealed that 17 had held a stake in the company.
10. Joby Aviation, Inc. (NYSE:JOBY)
Number of Hedge Fund Investors In Q4 2022: 17
Joby Aviation, Inc. (NYSE:JOBY) is one of the hottest TaaS stocks out there due to its business model. Unlike other firms that focus on road TaaS, Joby is developing electric vertical take off and landing (eVTOL) planes to shakeup the urban mobility market. The firm is headquartered in Santa Cruz, California and it announced the final assembly of its aircraft in February 2023.
By the end of last year’s fourth quarter 17 of the 943 hedge funds surveyed by Insider Monkey had bought Joby Aviation, Inc. (NYSE:JOBY)’s shares.
9. Expeditors International of Washington, Inc. (NASDAQ:EXPD)
Number of Hedge Fund Investors In Q4 2022: 28
Expeditors International of Washington, Inc. (NASDAQ:EXPD) is a logistics and freight forwarding firm. The company provides end to end transportation services to businesses ranging from order management, packing, negotiating letters of credit, and air and ocean freight forwarding.
As of Q4 2022, 28 of the 943 hedge funds polled by Insider Monkey had invested in Expeditors International of Washington, Inc. (NASDAQ:EXPD). The firm’s largest hedge fund shareholder is Jean-Marie Eveillard’s First Eagle Investment Management which owns 2.7 million shares that are worth $285 million.
8. GXO Logistics, Inc. (NYSE:GXO)
Number of Hedge Fund Investors In Q4 2022: 33
GXO Logistics, Inc. (NYSE:GXO) provides logistics and transportation services to firms operating in food and beverage, consumer electronics, and other industries. It lets its customers run electronic commerce and omnichannel fulfillment operations.
Insider Monkey dug through 943 hedge fund portfolios for last year’s fourth quarter and found out that 33 had bought GXO Logistics, Inc. (NYSE:GXO)’s shares. Out of these, William B. Gray’s Orbis Investment Management is the firm’s largest hedge fund investor with a $642 million stake.
7. Avis Budget Group, Inc. (NASDAQ:CAR)
Number of Hedge Fund Investors In Q4 2022: 35
Avis Budget Group, Inc. (NASDAQ:CAR) is one of the hottest TaaS stocks right now due to its consumer facing operations. The firm has a 19,000 vehicle fleet which it rents out through dealers and its own offices.
35 of the 943 hedge funds part of Insider Monkey’s research had invested in the company as of December 2022. Avis Budget Group, Inc. (NASDAQ:CAR)’s largest investor in our database is Karthik Sarma’s SRS Investment Management which owns 18.4 million shares that are worth $3 billion.
6. DoorDash, Inc. (NYSE:DASH)
Number of Hedge Fund Investors In Q4 2022: 41
DoorDash, Inc. (NYSE:DASH) is a popular TaaS stock that is a household name as well. It operates an online platform that makes food deliveries.
As of last year’s fourth quarter, 41 of the 943 hedge funds surveyed by Insider Monkey had bought DoorDash, Inc. (NYSE:DASH)’s shares. Lei Zhang’s Hillhouse Capital Management is the firm’s largest investor through a $219 million stake.
Along with Lyft, Inc. (NASDAQ:LYFT), Union Pacific Corporation (NYSE:UNP), DoorDash, Inc. (NYSE:DASH), and Uber Technologies, Inc. (NYSE:UBER) are top TaaS stocks that hedge funds are piling into.
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Disclosure: None. 12 Best TaaS Stocks to Buy Now is originally published on Insider Monkey.
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