How to Invest in TaaS: Your Complete Guide

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Whether you’re looking to start investing or continue building your portfolio, checking emerging trends can be a wise move. In many cases, successful investing means staying ahead of the curve — a tactic that can help you scoop up stocks that are poised for growth. One arena that’s trending upward is TaaS; it could be an exceptional opportunity to expand your portfolio into an industry that’s just taking off. If you’re new to TaaS and want to know more about what it offers, why investing in it is worthwhile and how to get TaaS into your portfolio, here’s what you need to know.

What Is TaaS?

TaaS stands for “transportation as a service.” It encompasses any third-party company that operates mainly in the vehicle-based mobility space and often includes companies that facilitate transportation without requiring consumers to use their own vehicles. Along with modern modes of transportation like Uber and Lyft, TaaS includes classic options like taxis, car rentals, product- and food-delivery services, and many logistics- and shipping-oriented businesses. Essentially, if it’s a service that allows you to access a vehicle you don’t own for the purpose of transporting either yourself or goods to a destination, the company potentially falls into TaaS territory.

TaaS isn’t technically anything new. However, it’s experienced significant growth since the COVID-19 pandemic began. While the rise in home delivery isn’t likely to maintain pandemic levels over the long term, there are other factors that may keep general interest high.

For example, rideshare companies remain a solid alternative to traditional taxis. Food-delivery services may become more essential for working professionals who are returning to offices and daily commutes and are looking to save time. Short-term car-rental companies, such as Zipcar, are an attractive option for people in cities who only have the occasional need to drive a vehicle.

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Even if COVID-19 marked a heyday for certain TaaS companies, the need for these services isn’t disappearing moving forward. In the end, most major TaaS businesses were making significant progress before the pandemic and will likely continue to do so after. As a result, the potential for growth remains, even if it doesn’t reach pandemic heights or takes longer to do so.

How to Invest in TaaS

You do have the option of signing up with a TaaS business if you want more direct earnings potential. For example, you can list your vehicle on a carsharing app. While this isn’t an investment in a traditional sense, it does allow you to potentially profit from participating in the TaaS landscape. Just make sure you review any terms and conditions, earnings tables and other pertinent details before you begin.

Otherwise, you’ll want to look for opportunities to add TaaS companies to your investment portfolio. In most cases, investing in TaaS is as simple as investing in any other industry. You typically have two choices. First, you can purchase specific stocks. Second, you can find ETFs, mutual funds or similar options that feature TaaS businesses in their makeup.

Both approaches allow you to capture benefits relating to the growth of the TaaS industry. With the latter, you also get an automatic degree of diversification, which could work in your favor if you’re newer to investing and don’t have a broad portfolio just yet.

TaaS Stocks Worth Considering

1. Uber

When it comes to giants in the TaaS space, you can’t overlook Uber. While the company has experienced its fair share of ups and downs, as well as praise and criticism, it’s got the highest market capitalization in the rideshare category. Uber is nearly synonymous with ridesharing overall. Plus, the company is a solid presence in the food-delivery space with Uber Eats, giving it a degree of diversification within its model.

2. DoorDash

DoorDash remains a leader in the world of online food ordering. While interest in this service group is expected to remain below the levels the industry experienced during the height of the pandemic, many people value the convenience of food delivery. This could be particularly true as professionals work to reacclimatize to heading back to workplaces and navigating commutes — responsibilities that leave them with less time for cooking and shopping.

Additionally, DoorDash has evolved over time by moving beyond food and into retail deliveries. For consumers who value the convenience of having products delivered quickly to their doors, this gives DoorDash a solid position. Along with general name familiarity, it’s an app many consumers already use, so expansion could lead to higher sales.

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3. UPS

When lockdowns began during the pandemic, online shopping became the norm in many households. That led to significantly higher demand for shipping services, giving UPS a chance to grow at an unexpected pace.

While in-store shopping has become convenient again, many people grew more comfortable with shopping online. In some cases, it was pure convenience. In others, it was the ability to score better prices. But, regardless of the reason, this plays in favor of shippers like UPS. Plus, UPS is a staple in this industry, and that longevity may give some investors peace of mind.

4. Hertz

While Hertz isn’t the biggest rental car company (that honor goes to Enterprise), it is the largest one that’s publicly traded. The company operates several major brands beyond Hertz, including Dollar, Thrifty and Rent-a-Car. Plus, along with passenger vehicles, the company offers trucks and vans for DIY jobs, moving to new homes and other short-term transportation needs.

The company has benefited from an increased interest in travel. Even after dealing with a bankruptcy in 2020 and 2021, Hertz has reorganized and devised a plan for managing debt. Plus, Hertz is diving into the electric vehicle (EV) market, which could improve its overall position.

5. Lyft

While Lyft doesn’t have the market share of Uber, it’s still a force in the rideshare space. Like other rideshare companies, the pandemic hit the company hard. However, Lyft had a fairly speedy recovery and outperformed estimates when it came to revenue generation in early 2022.

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Generally, experts believe Lyft has more room for growth, with rising revenue expected in the rest of 2022 and through 2023. While this may not take place if a recession occurs, Lyft benefits from the public’s attempt to get back to “normal” post-pandemic, and that could be enough to make it a wise addition to a portfolio.

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