Uber Versus Lyft 2K20
Uber and Lyft have changed the world by making our A-to-Bs snappier and more convenient, “but neither knows how to make this service profitable!” says the bear. “Not yet!” says the bull!
Despite their billion-dollar valuations, ride-hailing apps are burning cash with their stock prices volatile as investors struggle to keep the faith. Uber and Lyft execs are jumping overboard through insider selling, and at the same time, markets demand they cough up earnings not only for the future but for the past. Investors need to offset years of losses, measured in the billions!
It’s advantage Uber right now, though. It could monopolize the entire industry as a majority of ride requests head its way, tempting more gig economy drivers to hit the road. That “driver liquidity” should make for a timely and convenient service that customers can rely on, all at the expense of Lyft.
Uber’s plans to turn profitable also anchor on UberEats, as well as micro-mobility e-bikes and scooters (46% of trips in the US under three miles). Big bets on ride-hailing start-ups around the world have also been made, just in case any of them find the winning formula!
Lyft, on the other hand, is catching up with the help of a beneficial relationship with Google’s Waymo, food delivery ventures with Taco Bell, and of course, every front-page Uber fiasco! It may be smaller, but Lyft wants to win just as badly as Dara Khosrowshahi’s Uber. That’s why it lets drivers keep 100% of their tips, and riders split the fare.
In a recession, people will substitute their shofars for cheaper forms of transport, and that’s when things will really get interesting. Still waiting on a payback, investors and lenders could lose patience. Shares could follow these companies’ prospects into free-fall, and tech giants could swoop in to buy out Uber and Lyft and get their volume on the cheap. All in 2020?