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The big debate among stock market investors currently is whether they prefer Uber or Lyft. Both companies may seem to offer virtually the same services, but when you go into details, things become less clear.
1. Lyft is concentrated; Uber is swollen
The main difference between Uber and Lyft is size. While Uber is present in nearly 70 countries, Lyft is only present in the United States and has approximately 300 cities operating their services. Some might think that Uber is the top investment because of its size, but this is not the case. The bigger the size, the more the expenses and the risks of exploitation increase. While Uber faced (and continues to face) a regulatory storm, Lyft's only presence in the US allowed him to avoid most of the troubles Uber caused. As a young child watching an older brother, Lyft learn Uber mistakes. Yes, Lyft makes a loss, just like Uber. Techcrunch.com reported:
Lyft registered $ 2.2 billion in revenue in 2018, more than double the billion dollars recorded in 2017. At the same time, losses have increased significantly. The company recorded a net loss of $ 911 million on the $ 2.2 billion turnover and a loss of $ 688 million on the billion dollars of 2017.
The leaner your business model, the easier it is to avoid complicated setbacks. By focusing on the United States, Lyft makes sure to only manage a (mostly) business-friendly environment that promotes investment. You can not say as much for Uber.
2. Lyft IPO gives it credibility
Let's be honest; Safety is the main concern of all users of a carpool service. All you want is to arrive where you are going safely and efficiently. Uber and Lyft have made it their top priority. Obviously, in its early days, when Uber dominated the landscape, it was the obvious choice. However, as Lyft absorbs Uber's market share, it is becoming increasingly clear that consumers legitimize its smallest competitor.
By filing an IPO application, Lyft has enjoyed an incredible publicity, regularly compared to Uber. Before the IPO speech, I had barely considered Lyft, but Uber's monopoly in my life is over. In a business where consumer confidence is paramount, being able to identify as a publicly traded company is worth its weight in gold.
Beating Uber in the IPO market is crucial for Lyft's continued growth. | Source: AP Photo / Gene J. Puskar
3. Drivers can use both Lyft and Uber
As a frequent customer of ridesharing services in Los Angeles, one of the major concerns I have faced is the availability of drivers. Nobody wants to stay 20 minutes in the rain of the vehicle, but the driver must cancel at the last minute, without another car in sight. I asked many drivers why they drove for the same company they do, and the answer is almost always the same, that they make fun of Lyft or Uber because they use both simultaneously. The fact is that Lyft has managed to match Uber's payment and cost model for all differences, with the exception of slight differences. Keeping the drivers happy is huge for Lyft. Having enough active cars is a big challenge for a smaller, lesser-known brand with fewer customers.
More and more drivers are increasing the number of passengers, and Lyft can continue to effectively reduce the number of cars on the road as long as drivers see an advantage in using both applications.
4. Uber is not the only investor in driverless cars
One of the main selling points for Uber is the fact that investing in their IPO is not limited to investing in ridesharing technology. It also invests in Uber Eats and in the more attractive driverless car technology. Lyft is also investing in driverless technology. They associate Uber step by step in all the progressive ideas of urban transport. Although we do not know who will have the most success with unmanned technology, Lyft is also an actor. Its US-centric policy may help it regulate and run its cars faster than Uber, which will deal with many different regulators.
5. Momentum is with Lyft
People talk a lot about the dynamics of financial markets, often very subjective. The fact that something has increased last month does not mean that it will continue. However, it is often useful to consider these trends as they can provide insight into consumer behavior. As you can see in this picture, Lyft has significantly reduced Uber's market share in recent years. If we focus on particular cities, even more interesting statistics come, because in Seattle, Lyft is not far from 50%.
If Lyft can focus on large US cities and achieve a comparable market share, it could then offer investors a more stable economic model than Uber. Uber's reliance on a large scale would make it more vulnerable to changing global market conditions. As Dan Sperling told phys.org some time ago,
"The only advantage of internationalization is being bigger, I think it's absolutely wise to stay focused on the US market. This means it will be a small business, but the profitability will be just as much. "
It could also face arbitrary decisions from foreign governments that domestic investors might not see coming.
Uber vs Lyft, but understand the difference
Although everyone wants to group these two companies together, from a financial point of view, it may be a bad approach. Yes, they offer the same services, but it is their independent ambition to differentiate them. Uber is a great vision of the global monopoly, while Lyft seeks to dominate the domestic market. For this reason, despite the small size of Lyft, it could be the safest game. That's not to say that LYFT has no problems with slowing revenues and debt, but over the past scandals, Uber has more drivers, more bikers – and more problems.
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