Investor’s Perspective: What’s the Difference Between Uber and Lyft?

In this Motley Fool Money podcast, Motley Fool analyst Maria Gallagher discusses: The prospects for Uber reaching profitability by the end of 2023.

How challenges in China contributed to Starbucks (NASDAQ: SBUX) suspending its guidance for the rest of its fiscal year.

Starbucks’ 12% same-store sales growth in the U.S.

Also, Motley Fool analysts Emily Flippen and Asit Sharma discuss the business of pet ownership and the prospects for small-cap Rover Group (NASDAQ: ROVR) .

To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center . To get started investing, check out our quick-start guide to investing in stocks . A full transcript follows the video.

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This video aired on May 4, 2022.

Chris Hill: Today on Motley Fool Money : ridesharing; the business of pets; and coffee — wonderful, wonderful coffee.

I’m Chris Hill. Joining me today from the financial capital of the United States of America, it’s Motley Fool Senior Analyst Maria Gallagher. Good to see you.

Maria Gallagher: Nice to see you too.

Chris Hill: We’ve got the latest on Starbucks and Match Group. We’re going to get to those, but we’re going to start with the ridesharing businesses: Uber and Lyft, both out with first-quarter reports.

There is a tendency to lump these two together, not just because they’re in the same line of work and because they typically report earnings at about the same time, but also because for a long time, their businesses sort of tracked one another. I feel like what we’re seeing today is representative of some sort of divergence between the two businesses, and not just because shares of Lyft are down dramatically more than shares of Uber. But it seems like they are in different places in terms of where they are investing.

Part of why shares of Lyft are down is they are talking about how, “Hey, look, we’re going to be spending more money. We need to spend more on driver incentives.” It’s not that Uber is suddenly magically a profitable business. But it seems like… I don’t know, are they more mature as a business? What do you see when you look at these two?

Maria Gallagher: Yeah, I think it is really important to understand that they are really used interchangeably, colloquially. In terms of what ride are you getting, it’s either going to be Lyft or Uber probably, and so understanding the difference in scale is really important.

If we’re looking at Uber — last quarter, their gross bookings were $26.4 billion, which was up 35%. Their revenue was up 136% to $6.9 billion. Trips grew 18%. There are 19 million trips on Uber a day, on average, which is just so many. And then, if you look at that in comparison to Lyft, their revenue was up 44% to $875 million and they have about 17.8 million active riders.

And Lyft spoke more about increasing spending and investments in drivers and marketing, and when you’re thinking about comparing the two rates, we can think about that diversification in Uber. We had delivery gross bookings up to almost $14 billion. They have more acquisitions, more investments, but also, at the same time, Uber reported a $5.6 billion headwind related to equity investments in Grab or in Didi . So Uber is working on a deal with taxi drivers to fill demand. Lyft isn’t. So Uber has much more diversification, much more scale than Lyft does, and Lyft is really doubling down and saying they’re going to continue to increase spending and investments in drivers, and continue to spend in marketing, whereas Uber is saying they’re going to be profitable this year. They’re going to have positive free cash flow this year. So they are in different parts of their journey. But I do think as a user, I use mostly Lyft. But I use both. I think it’s one of those things where sometimes great products aren’t necessarily always great businesses, and so I feel the same, and […]

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