When passengers order rides from ridesharing giants Lyft, Inc. (LYFT) and Uber, they do so with the tap of a finger on a smartphone. A nearby (hopefully) driver gets the request on his or her smartphone and heads to the pickup destination.
All of that may seem high tech, but Standard & Poor’s, the index provider that sets the groundwork for the Global Industry Classification Standard (GICS), will not be classifying Lyft and Uber as technology companies. S&P maintains the GICS system with MSCI, another major index provider.
Rather than classifying Lyft and Uber as technology companies, the rideshare giants will reside in a stodgy sector: industrials. In addition to dwelling in industrial exchange traded funds (ETFs), such as the the Industrial Select Sector SPDR (XLI ), Lyft and Uber, when the latter goes public, will become of transportation ETFs.
GICS “has assigned Road and Rail as Lyft’s primary Industry (level 3) and Trucking as its primary sub-industry(level 4),” according to S&P. “The decision was based on Lyft’s Form S-1 filing, ‘(t)he Company generates substantially all of its revenue from its ridesharing marketplace that connects drivers and passengers.’”
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Under GICS, there are three sub-classifications for trucking companies. Transportation of passengers is one of those three, indicating Lyft and Uber are accurately classified in the transportation industry.
Additionally, GICS has four metrics for classification of a company as a road transportation of passengers firm. Lyft and Uber check two of those four boxes – carpool and vanpool operations and livery service.
“We have taken this opportunity to have reviewed approximately 200 global public and private companies operating in the similar ride sharing business model as Lyft and Uber and reassigned their primary industry and sub-industry to conform with GICS’s Road and Rail and Trucking respectively,” said S&P. “We have further assigned more than half of those into sub-industries like Taxicabor Carpool and Vanpool Operations. For a few that are purely providing online transportation software or in the car rental business, we have also assigned them as such under either the Online Transportation or Passenger Car Rental.”
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