BOSTON, Dec. 18, 2014 /PRNewswire/ -- A new analysis
by HVM Capital concludes that the disruption in the taxicab
business caused by upstart car-for-hire firms such as Uber and Lyft
is only beginning, and warns investors to be wary of stocks in
corporations financially exposed to taxicab medallion prices.
Most vulnerable, the report says, are companies such as
Medallion Financial Corp., Signature Bank, and multiple credit
unions and other specialty lenders that lend money for purchases
and, in the case of some, ownership of taxi medallions – the
government-controlled taxi permits. The values of taxi medallions
throughout the country have plummeted between 20 and 40 percent
over the last year, a trend HVM says will continue.
"Medallion markets are absorbing the sudden incursion of
unconstrained vehicle-for-hire capacity that is lower-priced,
higher-quality and offers better customer service," the report
says. "Cities and states across the US have overwhelmingly opted
for acceptance and regulation rather than elimination, and courts
have rejected invocation of takings or eminent domain arguments for
medallion owner compensation after medallion values collapsed."
Medallion Financial, for example, has $689 million of managed loans collateralized by
taxicab medallions (53 percent of total managed loans), and owns
150 medallions in Chicago, the
market most vulnerable to near-term collapse, valued at
$49 million but worth $33 million at current medallion prices.
"We believe once it is clear to market participants that supply
constraints have been permanently eliminated and exclusive access
once conferred by medallions is gone, taxicab medallions will
eventually be worthless," said the report's author James F. Hickman, of HVM Capital. "Any company
with heavy concentration in this area, such as Medallion Financial,
is looking at a severe financial reckoning."
The complete 23-page report is available for download at:
www.hvmcapital.com/taxi.pdf
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/ride-sharing-to-seriously-impact-taxi-medallion-lenders-new-investment-report-concludes-300011939.html
SOURCE HVM Capital