Turning a Corner

Uber reported earnings yesterday and is finally generating positive cash flow. Lyft is dying. Why is Uber winning the war?

More Trips

Lyft only does passenger rides, while Uber does rides and delivery. Uber’s delivery business has grown in recent years to have about as many trips as its rides business. This allows Uber to keep more drivers happy, paid, and circulating in case someone needs a ride. As a result, Uber can deliver faster response times for riders and a better experience.

Higher Prices

Because Uber can deliver a better experience than Lyft, it can raise prices (i.e. the cost of a given ride) without losing significant market share. This has driven revenue growth higher at Uber with more trips and higher prices. Meanwhile Lyft has stagnated. Look closer at the chart below - Lyft gross bookings are down since the beginning of the pandemic 4 years ago. The company is having to cut prices in order to stay alive, which is not a recipe for success.

A Lot Higher Prices

Uber has pushed up prices (take rates) on its passenger rides by more than 20%. Users can feel that the product has gotten more expensive. But Uber has not lost share because it has gained market power.