Invest in Lyft or Uber stocks — who will win the race?

The Lyft and Uber IPO caused quite a stir in 2021, and both were eagerly awaited. Since May 10th, you can invest money in these stocks, Lyft has been ahead of its competitor. However, the price development of both stocks has already caused disillusionment among investors within a short time. Many people are already calling the IPOs a flop — although we do not share this opinion because we believe such statements are too early. Both investments are by no means considered conservative, but tend to be risky. So this is the reason to take a closer look at both companies.

We will try to find an answer to the following questions: Would you rather buy Lyft or Uber stocks? Which investment is more promising and, above all, why? Can Uber or Lyft price movements be described as more positive so far? Do both Lyft and Uber have the potential to become an absolute highflyer in the future, or has the fantasy simply overpowered the investors and should they leave their fingers off it? In addition to a well-founded stock analysis, we dare to offer an outlook on Lyft and Uber stock forecast.

Lyft and Uber analysis

1. Uber

Uber is a US company based in San Francisco. Uber’s services connect passengers with drivers. Many people say that classic taxi services have been revolutionized by companies like Uber. Let’s take a quick look at Uber’s history. It was founded in 2009. Originally it was a limousine service. In 2013 the turnover amounted to 213 million US dollars. When you look at the growth, it is not surprising that the forecasts were so positive for a long time: Turnover in 2021 was an impressive 11.3 billion US dollars.

The main business is the transportation service via a free downloadable smartphone app. The Uber stock potential is also so great because the business model is convincing: Uber competes with almost every taxi company in the world, without owning vehicles and without hiring a significant number of drivers, as they operate independently. However, we don’t want to hide the fact that although the potential of stocks is great, a stock investment also involves risks. Investors must assess these risks and at the same time ask themselves whether the company is not already overvalued.

There are also political uncertainties, in particular: in several countries there have already been attempts to ban the provider’s services. Of course, this would probably have a negative effect on the Uber stocks price. Before we get a little deeper into the matter and take a look at the Uber stocks chart performance, let’s briefly outline the competing company Lyft.

2. Lyft

Lyft is, just like Uber, a US-American company in the field of personal logistics. In comparison to Uber’s turnover, Lyft’s figures seem to be almost low. The turnover in 2021 was 2.2 billion US dollars. However, Lyft is still far from being in profit. Last year, the loss reached as much as 911 million US dollars. But does this automatically mean that the Lyft stocks potential is low and positive Lyft stocks forecasts are unrealistic? In our opinion, not. However, the loss is an unmistakable sign that Lyft stock investments contain risk factors that are difficult to assess. If you want to invest money in Lyft, you should not do so without thinking about it. Lyft currently seems to offer six different services. For example, the category of the vehicle used varies: from the luxury car to the low budget vehicle. But how does Lyft work at all?

Similar to Uber, Lyft also uses a custom developed app for the handling. Here you can set your location and let a driver take you to the desired place. In the mobile application, an approximate arrival time is displayed when the order is placed. Payment is just very uncomplicated via the app — including tips. Currently, Lyft is mainly active in the USA, while the company has research offices in Germany, but nothing more to this day.

In the next part of this Lyft and Uber stock analysis, the focus is on why the Lyft and Uber stock potential is considered so large. How did the rapid triumphal progress come and why did the stocks gained so quickly? If you want to learn how to trade stocks, you should not underestimate the importance of a fundamental analysis in addition to the selection of suitable trading strategies.

That’s why Lyft and Uber stocks potential is so great

Many wonder why Lyft and Uber were able to bring down so many stocks of conventional taxis This is mainly due to the fact that two companies mentioned are extremely competitive. The following factors play a major role here:

• Uber’s and Lyft’s tariffs are cheaper for customers than taxis
• Most drivers are sole proprietors, so there are no social security contributions.
• In addition, the obligation to pay taxi licences has been eliminated so far.
• The market position is considered to be extremely strong.

Weighing pros & cons on Lyft & Uber stocks investment

Of course, there is the possibility to make huge profits with a Lyft or Uber stocks investment. However, it is quite possible that it will take a few more years before the two companies reach the profit zone — if they can take this step at all. But if you are considering the stock investments with lower risk, you could, for example, buy dividends shares and sometimes even generate considerable profits through the constant flow of money. What are the risks?

Investors of both IPOs in 2021 should keep an eye on these risks

Of course, the two companies should not be considered together. However, as they operate in the same sector, there are a number of factors affecting both Uber and Lyft. Why, therefore, could it be risky to invest money in Lyft or Uber stocks?

• Both companies are still in the unprofitable zone. Compared to investments in profitable companies, such an investment is much more risky.
• On the very first day Uber stocks fell 7.62 percent below its issue price. This was possibly the first sign of the recent chart movement.
• A number of reasons led to the fact that both Lyft and Uber stock market launch were initially negative. As a result, a skeptical mood quickly returned. As a result, many investors promptly decided to sell their stocks again.
• As already noted, Uber’s and Lyft’s business developments also depend on political factors. The market environment could change significantly within a very short period of time. As a result, it is not unlikely that the current competitive advantages over traditional taxi companies will soon cease to exist.

Lyft and Uber stocks comparison

One Uber stock is currently valued at around 37.67 euros. The market capitalization of Uber stocks amounts to 61.58 billion euros. In Lyft investors can invest at the same time for about 49,81 euro per stock. The market capitalization of this company is 13.21 billion euros. This difference is not a surprise: Uber is already active in around 60 countries, but Lyft is «only» active in the USA and Canada.

At a glance at the balance sheet, Uber can perform better than Lyft. One thing is certain: both companies are making losses. In relation to turnover, however, these are much lower for Uber. At this point, it is still too early to make a final decision that Uber stock potential is greater than that of Lyft.

If we focus on price movements, we cannot say too much about Uber yet — this is mainly due to the fact that the stocks are only available to private investors on the market a few days ago. Lyft chart performance, on the other hand, is more informative: since its IPO in 2021, Lyft stocks have already lost 30 percent of their price. In this respect, Uber stock price movement to this day can be described as more positive — even though Uber should not claim to be a success, because among the blind the one-eyed is king. So far it looks rather gloomy than rosy for stockholders of both companies.

Lyft and Uber stocks forecast

At this point, it makes sense to analyze the market again in order to work out the differences between Uber and Lyft.

Overall, the market in which Uber and Lyft operate can undoubtedly be described as clouded. Of course, there are numerous arguments that bear witness to the great Lyft and Uber potential. The administrative costs of both companies are relatively low, which is why there is a good chance, especially in the long term, that the profitable limit can be crossed. This is offset by relatively high expenditure in the IT area. In addition, you have to consider that the current low fares may still be a result of cross-subsidization.

Developments and advances in the field of autonomous driving could also be an important factor in the future, which supports Lyft and Uber Investment. This would allow them to offer the trips at a reduced price, both companies could take advantage of the potential and increase their margins considerably. Overall, there is a very good chance that the cost per kilometre driven will be reduced. In addition, the growth of both companies is by no means limited solely to passenger transport, on the contrary. Other segments in which sales increases are expected are, for example, food and goods deliveries. Some share the vision that companies — or at least one of them — will become an Amazon of transport, a digital platform for mobility transactions.

Long story, short sense: Are Lyft or Uber stocks more promising?

At this point, we would like to highlight that the following evaluation is neutral and above all subjective. Just because we estimate the stock potential to be higher does not automatically turn this into a trading recommendation.

Uber’s path may turn out to be a rocky one. This is reflected in the fact that growth has made little progress in the last three quarters. However, we see a greater chance that it will become a global phenomenon that will be able to make a triumphal march across almost the entire globe. Conditions are simply better than at Lyft. Conditions are simply better than at Lyft. Uber is active in many more countries, has higher sales and relatively lower losses. We see the opportunities and the dangers equally: if the positive forecasts come true, then in a few years this company will be an almost indispensable organization, activein in the various areas: passenger transport, goods transport, food deliveries and mediation between business partners. In addition, it is highly conceivable that the data collected from users can also be profitably monetised in the future.

We do not want to deny that Lyft also has the potential to become a globally active company in the profit zone. However, the revenue-loss ratio causes us headaches. For this reason, we recommend entering the market only with small positions. We advise conservative investors to observe the market from the sideline. There is no reason to rush.