Aaron Elstein crainsnewyork
In the Markets: Only an Uber-Lyft merger could drive out massive losses in ridesharing
If there’s a difference between an Uber or Lyft ride, I can’t tell. Whichever you call, it’s the same drivers in the same cars charging the same rates.
But Uber and Lyft aren’t the same at all, so far as the financial community is concerned. Uber has a $70 billion market valuation, but Lyft’s is less than $4 billion.
That’s striking, considering both are seeing ridership recover in New York, and at much faster rates than taxis, although it remains 15% below prepandemic levels. Both are also constantly nickel-and-diming drivers, who have been asking Albany to classify them as employees so they can get the right to unionize. And even after more than 10 years in business, neither Uber nor Lyft is remotely profitable.
It starts with Uber being bigger and more diverse because of its food delivery and trucking business. Its $32 billion in annual revenue is eight times larger than Lyft's; rideshare is the entire ballgame for Lyft. Uber operates in 72 countries, Lyft in the U.S. and Canada. It starts with Uber being bigger and more diverse because of its food delivery and trucking business. Its $32 billion in annual revenue is eight times larger than Lyft's; rideshare is the entire ballgame for Lyft. Uber operates in 72 countries, Lyft in the U.S. and Canada.
Ridesharing swamped the taxi business a decade ago and changed city living in really useful ways. Last week Uber said it surpassed 2 billion trips globally in a single quarter for the first time. New Yorkers e-hailed an Uber or Lyft more than 600,000 times in December, according to Taxi & Limousine Commission data, compared to waving down 100,000 cabs.
Even so, Uber still posted $500 million in net losses for 2022 and Lyft tallied up a $1.5 billion annual loss. Uber went public in 2019 at $45 a share and now trades for $34. Lyft went public at $72 a share and now trades for $10, meaning investors question whether ridesharing will be a viable business plan for a public company.
There is good reason to wonder.