Uber wants to be the Amazon of transportation. An investment in Uber (and Lyft) at IPO is a bet that these companies will find their AWS over next few years. It is banking on 1 or more of the big bets will pay off sooner than the money runs out. For both companies, the Rideshare business is incapable of ever making money as long as it has the Company - Driver - Rider model. It is basically a public good that exists subsidized by VCs, and soon public shareholders. So do any of the 2 companies have anything in their pipelines that could be their AWS? Let's see.. Uber has a diverse business outside rideshare. Uber EATS, Freight and ATG, NeMo could be that. They are also invested in Didi, Grab, Yandex, which should be worth a lot more in few years. Acc to S-1, Lyft only has AV and maybe Motivate going for it as it's potential AWS. Besides general diversification, why would anyone invest in Lyft over Uber once public? TC 250k 10 YOE non eng
The price of Lyft right now really doesn’t make any long term sense. It looks to be driven by short term expectations that the bubble will continue.
Smaller means more growth opportunities
Both Uber and Lyft are not good investments.
Funny you compare to Amazon and not to a more similar company like groupon
It's not me, it's Dara that said it. But definitely not sure how Groupon is a fair comparison.
Selling subsidized services. How is this similar to Amazon?
To me, both are risky and untested investments. I personally will never invest in Lyft at its current price. Lyft has a better goodwill (at this point) than Uber, but that can’t take them too far. It’s true Uber has a much more diverse business but I am not sure how serious they are about ATG and it’s future (based on my direct experience interviewing there and discussing at length about the job offer and opportunities with hiring manager). Similarly Lyft has its L5 self driving team but they are way behind others. Honestly in AV field, I will rank Waymo, Cruise and Argo as the key players now. Baidu is also quite ahead of Uber and Lyft in AV domain.
The only reason I could think of would be because Lyft isn’t raising as much capital on its offering so it is offering a lot fewer shares. With fewer shares, as you know it can create a shortage of supply and excess demand so it could create some momentum. Not really a good long term investment in my opinion though
Uber/lyft’s business model can scale as long as they collect more money from the rider than what they pay for driver. The rest of the cost is sublinear at most. Ideally, when Uber/Lyft could somehow replace individual car ownership and significantly increase their ridership, they could be very huge. Uber is comparable to Amazon before AWS, but ATG is no where close to AWS.
They don’t pay the driver. The customer pays the driver and the app takes a cut. Uber/Lyft don’t employ the drivers from what I thought. Uber/Lyft could start charging more for becoming a driver or maintaining the ability to be a driver. Or they could take a larger cut from the transaction. I think their fees now are just engineering / marketing / cloud
But this doesn't explain why Lyft over Uber
Lyft is an excellent short opportunity in my opinion. Limited growth, non-diversified product offering, no market expansion, and plans to profitability are imaginary.
That’s the case for both
Here’s my take - They are both overvalued. Uber valuation is already way over Lyft, not sure why the original question is. Lyft is growing faster and taking up market share from Uber in the US. But less geographically diversified. Uber rideshare business is leader in all places other than India. Business in South America is growing but stagnant in all other places (not sure about Australia and Africa). Food delivery has lot of competition and Uber slipped to number 3 in the US. Another concern for food delivery is restaurants has say unlike drivers. They might not agree with 20-30% cut anymore particularly the popular ones and new platform can easily attract customers by having some exclusive restaurants. So doesn’t look like this business is very profitable and has any protection. Say, is it worth to buy DoorDash for Uber? Hell no! Not even worth pennies to buy a competition in food delivery.
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