Rideshare Rivalry: Lyft Stock Shows Potential to Outperform Uber

Key Points

• Uber and Lyft have a rideshare duopoly in the United States.
• Uber has a 76% and Lyft has a 24% market share, but Uber’s gross bookings are 10x larger than Lyft’s.
• Lyft is gaining ground. In 2024, they added 33 new functions to the app and teamed up with Mobileye to deliver autonomous rides in Atlanta, Georgia, starting in 2025.

Rideshare or ride-hailing has become mainstream and an essential part of many commuter’s lives. In the United States, there exists a duopoly between Uber Technologies Inc. NYSE: UBER and Lyft Inc. NASDAQ: LYFT, with the market share divided around 76% to Uber and 24% to Lyft. While Uber’s domination is evidenced by its underlying stock performance, Lyft is starting to gain some traction thanks to its new CEO, David Risher, who also happened to buy another 13,800 shares on Nov. 15, 2024.

Both Uber and Lyft are in the computer and technology sector, not the transportation sector, as many investors may believe. They don't own the vehicles. Instead, they operate their mobile app platform, which connects and facilitates riders with drivers within their respective networks. Uber’s stock is trading up 17.8% year-to-date (YTD) compared to Lyft’s shares trading up 14.84% YTD. Going into 2025, investors may wonder which of these two stocks may have more upside. Let’s take a look.

Uber: The Undisputed King of Rideshare and More

As the pioneer in rideshare, Uber Technologies has become so popular and synonymous with ordering rides through a mobile app that its very name has become a verb. To “Uber” to a location implies the action of hailing an Uber driver through the app to take you there. After a decade, the company has finally turned profitable. Uber had set out to be a multi-modal app with various forms of vehicle transportation as well as e-bikes and e-scooters, taxis, and public transit through its app. Uber also expanded into food delivery with its Uber Eats service, which exploded in popularity during the COVID-19 pandemic.

Stellar Results, But Gross Bookings Growth Appears to Be Slowing

Uber's third-quarter 2024 earnings report has stirred up some concerns about its growth trajectory after missing expectations for its gross bookings. Uber reported Q3 EPS of $1.20, crushing consensus estimates for 37 cents. Revenues surged 20.4% YoY to $11.19 billion, beating consensus estimates for $10.99 billion.

Gross bookings rose 16% YoY or 20% in constant currency to $41 billion. Delivery Gross bookings rose 17%  or 24% in constant currency YoY to $18.7 billion. Trip volume during the quarter rose 17% YoY to 2.9 billion or nearly 31 million trips daily. Operating cash flow was $2.2 billion, and free cash flow was $2.1 billion. The company bought back $375 million in stock. Uber closed the quarter with $9.1 billion in cash and cash equivalents and expects to redeem $2 billion in outstanding debt at year's end.

Uber’s Full-Year 2024 Forecast

Uber expects gross bookings to grow 16% to 20% in constant currency for the full year 2024, in the range of $42.75 billion to $44.25 billion. Trip growth is expected to remain around 17% YoY.

Uber expects a 2% currency headwind in YoY growth and a 5% currency headwind in Mobility's YoY growth.

Uber CFO Prashanth Mahendra-Rajah commented, “We hit another important milestone this quarter, delivering over $1 billion in GAAP operating income for the first time in our company's history, and are on track to deliver 20% Gross Bookings growth on a constant currency basis for the full year.”

Lyft: The Underdog Is Gaining a Foothold Against Goliath Uber

The underdog of ride-hailing coming in at a distant second is Lyft. The company has been improving its metrics and adding new products thanks to the leadership of its new CEO, David Risher. In 2024, 33 new products and features have been added to Lyft’s service.

Price Lock is a $ 2.99-a-month feature that enables riders to lock in prices for scheduled and regular rides. This innovation has resulted in over 200,000 active passes, with Price Lock users taking an average of four additional rides per month.

Innovation and Efficiencies Drive Q3 Results

Lyft reported a third-quarter 2024 EPS of 29 cents, beating consensus estimates by 10 cents. Revenues jumped 31.6% YoY to $1.52 billion, beating $1.44 billion consensus estimates. Gross bookings rose 16% YoY to $4.1 billion. Adjusted EBITDA rose to $107.3 million, up from $92 million in the year-ago period. Active ridership rose 9% YoY to 24.4 million. Operating cash flow jumped to $264 million, up from $2.3 million in the year-ago period. Free cash flow surged to $242.8 million from negative $30 million last year.

Lyft's Full-Year 2024 Forecast

For its fourth quarter of 2024, Lyft guided gross bookings up 15% to 17% YoY or $4.28 billion to $4.35 billion.

Adjusted EBITDA is expected to be between $100 million and $105 million, and the adjusted EBITDA margin is expected to be around 2.3% to 2.4%.

Free cash flow will exceed $650 million. Gross bookings will grow 17% YoY.

The adjusted EBITDA margin will be 2.3%, up from the previous 2.1% outlook.

AVs and DoorDash Partnership

Active riders reached a new record at 24.4 million, up 9% YoY. The volume of rides also hit a new record at 217 million, up 16% YoY. Lyft will partner with Mobileye Global Inc. NASDAQ: MBLY, May Mobility, and Nexar to connect riders with autonomous vehicles. In 2025, Atlanta riders will have the option of requesting autonomous vehicles for their rides. Lyft is partnering with DoorDash Inc. NASDAQ: DASH to offer exclusive benefits to rides that link their DashPass accounts.