Uber vs. Lyft: A Comparative Analysis of Ride-Hailing Giants

Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT) are two prominent names in the ride-hailing industry. While Uber leads the market not only in the U.S. but also in many countries worldwide, Lyft operates mainly in the U.S. and Canada, positioning itself as the underdog.

In addition to ride-hailing, Uber also offers food delivery and other services through Uber Eats. Conversely, Lyft partners with third-party companies like DoorDash for its delivery services. Both platforms also provide bike and electric scooter rentals in select urban areas.

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Both Uber and Lyft went public in 2019. Currently, Uber’s stock trades 36% higher than its IPO price of $45, whereas Lyft’s stock has fallen over 80% from its IPO price of $72. Uber’s success stems from its ability to streamline operations, while Lyft has struggled with slower growth and ongoing losses. Will Uber continue to be the better investment compared to Lyft? Let’s take a closer look at both companies.

Company Growth: A Tale of Two Giants

Between 2018 and 2023, Uber achieved a compound annual growth rate (CAGR) of 23% for gross bookings, with revenue rising at an even greater pace of 27%. The platform attracted 150 million monthly active users, up from 91 million in 2018. Although the pandemic slowed ride-hailing demand, Uber offset these losses by expanding its food delivery services.

For 2024, Uber anticipates a gross bookings growth of 17%-18%. Analysts project a 17% rise in total revenue this year and foresee growth to $50.6 billion by 2025, driven by services like Uber One and healthcare deliveries.

In contrast, Lyft reported a CAGR of 15% for revenue from 2018 to 2023, only beginning to disclose its gross bookings in 2023. Its active rider count increased from 18.6 million to 22.4 million during this period. The pandemic hit Lyft harder than Uber since it did not provide food delivery services and faced greater driver shortages.

Looking ahead, Lyft projects a 17% increase in gross bookings for 2024, following a 14% growth in 2023. Analysts expect its revenue to surge by 31% this year, reaching $6.6 billion in 2025, thanks to new features and partnerships.

Profitability: Who Comes Out on Top?

When it comes to tracking profitability, both companies typically refer to their adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Uber’s adjusted EBITDA turned positive in 2022 and more than doubled in 2023. On the other hand, Lyft achieved its positive adjusted EBITDA only in 2023.

Uber reported a GAAP profit in 2023, primarily due to divesting unprofitable business segments and implementing cost-cutting measures. Analysts predict a 117% growth in Uber’s GAAP earnings per share (EPS) in 2024, followed by a 22% increase in 2025.

Although Lyft has yet to turn a GAAP profit, it is also working on cost reduction strategies and does not plan to compete with Uber in international markets. Analysts forecast Lyft will achieve profitability by 2025.

Evaluating Stock Value: Which is Better?

Uber’s future looks promising, with its stock priced at 15 times next year’s adjusted EBITDA. However, an investigation by the Federal Trade Commission regarding Uber One’s subscription policies has influenced its valuations. Meanwhile, Lyft trades at a more attractive valuation of just eight times next year’s adjusted EBITDA with no ongoing investigations.

Ultimately, while Uber has robust prospects, Lyft may present a greater upside at current price levels. Although Lyft is considered a higher-risk, long-term investment than Uber, it might be a more appealing option today.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends DoorDash and Uber Technologies. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.