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Uber Technologies Inc. appears to be outperforming its smaller competitor, Lyft Inc., as the ride-hailing companies attempt to drive their businesses back from pandemic lows, some analysts say.
As the two companies prepare to release their third-quarter financial results, Analyst data indicates more spending on Uber
UBER,
— which also has a delivery business — than Lyft
LYFT,
and the incentives both companies offered to drivers appear to have been more beneficial to Uber.
RBC Capital Markets analysts say Uber is delivering riders to their destinations faster, and for a lower cost, than Lyft.
“Uber’s more proactive investments in driver supply may be bearing fruit, which could be leading to some share loss for Lyft,” RBC’s Brad Erickson wrote in a note to investors.
Stifel analysts cited Apptopia data that showed fewer downloads and sessions of the Lyft app compared with the Uber app, for both riders and drivers. According to that data, total Uber downloads surpassed pre-pandemic levels and increased 14% year-over-year, while Lyft downloads continued to lag pre-pandemic levels and decreased 12% year over year.
And Bernstein analysts wrote that their route tracker and driver-app metrics suggest that Uber is recovering quicker than Lyft.
Still, both companies are going to benefit from economic reopening, said Tom White, analyst for D.A. Davidson. Noting that Lyft’s user base is “differentiated” because the company has tried to set itself apart from Uber, whose early reputation turned customers off, he said that “this reactivation of customers will be a meaningful test of Lyft’s brand strength and loyalty.”
Lyft is scheduled to report earnings on Tuesday afternoon, and Uber is expected to follow on Thursday afternoon. Here is what you should expect.
What to expect from Uber
Earnings: According to FactSet, analysts on average expect Uber to post a loss of 34 cents a share, or $677 million. Estimize, which gathers expectations from analysts, hedge-fund managers, executives and more, expects the company to post a loss of 27 cents a share.
Revenue: Analysts on average expect revenue of $4.41 billion, according to FactSet. Estimize is guiding for $4.39 billion.
Stock movement: Uber stock has fallen after reporting earnings in two of the past four quarters, and five of the 10 reports it has made since going public. Uber shares are down nearly 14% so far this year through Friday’s session, while the S&P 500 index has gained almost 23%.
What to expect from Lyft
Earnings: FactSet says analysts on average expect Lyft to post a loss of 2 cents a share, or $201 million. Estimize expects the company to post earnings of 10 cents a share.
Revenue: Analysts on average expect revenue of $862.4 million, according to FactSet. Estimize is guiding for $898.5 million.
Stock movement: Lyft shares have fallen after reporting earnings in two of the past four quarters, and six of the 10 reports it has made since going public. The stock is down about 6.4% so far this year through Friday’s session, while the S&P 500 index has gained nearly 23%.
What else analysts are saying
In September, Uber announced that it expected adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) between a loss of $25 million and a gain of $25 million for the third quarter, and raised its outlook for gross bookings.
Mark Shmulik, Bernstein analyst, on Uber: “We think [gross bookings] will grow incrementally in Q4, as implied by competitor guidance and seasonality. On margins, we think Delivery drove most of the improvement in Uber’s EBITDA guide in [September].”
Mark Mahaney, Evercore ISI analyst, on Uber: “We think the recent investments in the company’s subscription business and new vertical expansion will prove more resilient demand trends amid a full Mobility recovery.”
Youssef Squali, Truist analyst, on Lyft: “While demand recovery varies by market, driver supply remains an issue nationwide, which has led to unsustainably high prices and longer wait time, in our view. We expect to see this trend improving and with it lower driver incentives and better unit economics, leading the company to sustained profitability in [the second half of 2021] and beyond.”
Mark Shmulik, Bernstein analyst, on Lyft: “User growth is already showing signs of slowing growth, if either engagement growth (rides/user) or pricing power fail to materialize LYFT’s revenue outlook could shrink.”
Out of 45 analysts surveyed by FactSet, 36 have a buy rating on Uber stock, while four have a hold rating, 1 says sell and four rate the stock at overweight. The average price target as of Friday was $66.96.
Out of 37 analysts surveyed by FactSet, 25 have a buy rating on Lyft stock, three rate the stock overweight, 12 have a hold rating and one says sell. The average price target as of Friday was $70.79.
