Uber and Lyft, the two biggest names in ride-hailing, have become staples in transportation. Despite their shared industry, the companies are on vastly different trajectories. Uber’s diversified model and global reach contrast sharply with Lyft’s U.S.-focused approach. So, which company is the better buy right now? Let’s break it down.
Uber: The Giant That Keeps Growing
Uber, with a market cap of $128 billion, has steadily grown since its IPO in 2019. It’s more than a ride-hailing app; it’s a multifaceted platform.
- Revenue Growth: Uber’s revenue grew at an impressive 27% annual rate from 2018 to 2023, supported by its 150 million monthly active users.
- Diverse Offerings: Its Uber Eats delivery service complements ride-hailing and provides a cushion during challenging periods, such as the pandemic.
- Subscriptions and New Features: The Uber One subscription service, now with over 25 million members, and offerings like Uber Teens and healthcare deliveries signal continued innovation.
In 2024, Uber projects a 17%-18% growth in gross bookings. Analysts predict a 16% revenue increase in 2025, reaching $50.6 billion. The company’s focus on subscriptions and enterprise services is positioning it for steady growth.
Lyft: The Underdog Making a Comeback
Lyft operates with a leaner model, focusing solely on the U.S. and Canada. While this limits its scale, it’s not without its merits.
- Stabilizing Business: Lyft’s revenue grew 15% annually from 2018 to 2023, and gross bookings are expected to grow 17% in 2024.
- Subscription Innovations: Features like Price Lock and partnerships with DoorDash are helping Lyft diversify within its limited scope.
- Growth Potential: Analysts project 15% revenue growth in 2025, with efforts to stabilize profitability showing promise.
At a market cap of $5 billion, Lyft trades at just eight times next year’s projected EBITDA, offering a potentially higher upside for investors willing to take a calculated risk.
Profitability: Uber’s Lead, but Lyft’s Progress
Profitability remains a key differentiator. Uber turned profitable on a GAAP basis in 2023, driven by cost-cutting, strategic divestitures, and growth in core businesses. Analysts expect Uber’s profits to grow significantly, with GAAP EPS projected to rise by 117% in 2024.
Lyft, while not yet GAAP-profitable, is showing progress. Cost-cutting measures have helped it stabilize, and analysts expect it to achieve profitability by 2025.
A Quick Look at the Numbers
| Metric | Uber | Lyft |
|---|---|---|
| Market Cap | $128 billion | $5 billion |
| 2024 Revenue Growth (est.) | 17% | 31% |
| 2025 Revenue (est.) | $50.6 billion | $6.6 billion |
| Valuation (2025 EBITDA) | 15x | 8x |
Valuation: The Case for Lyft’s Potential
Uber’s scale and profitability make it a safer choice, trading at 15 times its projected EBITDA. However, its growth prospects face hurdles, including an ongoing Federal Trade Commission (FTC) investigation into its Uber One subscription policies.
Lyft’s valuation at eight times EBITDA is significantly cheaper, and it doesn’t face the same regulatory scrutiny. While Uber’s global diversification is a strength, Lyft’s focused approach and cost-cutting initiatives could yield significant returns for investors willing to ride out short-term risks.
A Risk-Reward Equation
Both Uber and Lyft have strengths that appeal to different types of investors. Uber offers stability, global scale, and a proven track record. Lyft, as the underdog, presents a more speculative but potentially lucrative opportunity.
For those seeking a safer investment, Uber remains a solid choice. But if you’re looking for a high-risk, high reward bet, Lyft’s current valuation might make it the better buy.
