5 ms·

The valuation difference between Uber & Lyft is staggering. Based only on brand recognition and valuation Lyft seems like the better investment today. Lyft's bi

by brentm 10y ago

The valuation difference between Uber & Lyft is staggering. Based only on brand recognition and valuation Lyft seems like the better investment today. Lyft's biggest risk is probably Uber's ability to withstand losses that would kill almost any other company but Lyft has refused to die. They might be the surprise leader out of those two companies 10 years from now. Unless Uber has made great gains in their profitability they seem likely to be messy on the public markets which will lead to all kinds of problems.

SubiculumCode 10y ago
Lyfts biggest problem is the media's tendency to refer to the industry as Uber. Kind of like search is to Google, and wiping noses is to Kleenex.
- drwl 10y ago
  related: http://english.stackexchange.com/questions/7235/what-is-a-word-phrase-for-using-a-term-for-a-popular-special-case-instead-of-a-g http://english.stackexchange.com/questions/7235/what-is-a-wo...
  - SubiculumCode 10y ago
    glad to know that there are so many terms for the phenomenon.
pisarzp 10y ago
You can't forget the difference in scale. Lyft is only in USA, while Uber is a global company. For them to enter Europe/Asia now, would mean tremendous investment.
- prostoalex 10y ago
  Would be interesting to know if revenues and profits match that valuation at the same 10x coefficient.
  - pisarzp 10y ago
    Uber seems to be in 581 cities [1] while Lyft in 200 [2]. So this is 3x difference. However, Uber is more global, therefore has much more large cities around the globe. It wouldn't be unreasonable to assume that on average cities are 2-3x larger. This alone could justify valuation gap. I would also assume that because of global presence, Uber has higher usage due to travellers. [1] http://uberestimator.com/cities http://uberestimator.com/cities [2] http://www.theverge.com/2017/1/25/14383370/lyft-expansion-new-cities-list-2017-far-cuts http://www.theverge.com/2017/1/25/14383370/lyft-expansion-ne...
    - prostoalex 10y ago
      Agreed, but from financial perspective the distinction between "profitable cities" and "subsidized cities" is important. As UberChina experience shows, the expansion (to 100 cities, no less https://www.cnet.com/news/uber-pledges-to-expand-to-100-more-chinese-cities/ https://www.cnet.com/news/uber-pledges-to-expand-to-100-more... ) is costly and sometimes turns out to be never sustainable.
- aetherson 10y ago
  Tremendous investment towards very uncertain results. Asia in particular -- what exactly is the point of investing in Asia? Uber got kicked out of China, and besides Japan, what other market is really worth investing in there for a company that constantly struggles with unit margins? I think I agree that Lyft is the better opportunity right now to Uber based on valuations -- while Lyft is clearly the less valuable company, it's hard for me to believe that it's 10x less valuable. 5x? Sure. But that makes Lyft twice as good an opportunity as Uber. Unfortunately, I think that both companies are most likely doomed. Uber almost certainly, Lyft maybe a little less certainly. There really isn't much sign that there's a $7B business in ride sharing, much less a $70B business.
  - pisarzp 10y ago
    I beg to differ here. Once you get the scale like Uber, and you don't have to spend billions on marketing, this is a very high margin business. Minimal costs to maintain infrastructure and 20% cut on millions of ride's a day. The only reason Uber was struggling is because it wanted total global domination. It was a land grab, and they played it quite well. Failed in China, but succeeded in quite large portion of the globe.
    - aetherson 10y ago
      This is a very 2015-era comment. We've seen a lot of evidence over the last year-and-a-half that it's just not true that Uber's only expenditures are on expansion. I think that this is the reality: 1. There are lots of reasons why customers may not take an Uber. They could take a Lyft, they could take their own car, they could take public transportation, they could take a taxi, and they could in many cases just not go out or substitute a closer destination. 2. Uber achieves high ride volumes in the face of #1 by heavily subsidizing both drivers and passengers, even in the case of relatively mature markets. This drives their profit margins down to extremely thin levels, or in fact negative. 3. Their proposed technological solutions to their margin problem have either not been broadly popular (Uber Pool) or have major roadblocks to even existing (self-driving cars). 4. Their proposed business model solution to their margin problem (being a logistics company) have the problem that nobody wants to be their customer. 5. All of the above are true even in the developed world, where a ride might average $15 and Uber's cut before subsidies might average $3. All of their expansion opportunities now (and in the last few couple of years) are in areas where a ride might average $5 and Uber's cut before subsidies might average $1 (or worse), making it harder and harder to recover the relatively fixed costs of expansion. 6. There is obviously a profitable business in being a taxi company. It's just not a $70B business, and indeed I'm not sure it's a $7B business.
- Apocryphon 10y ago
  Lyft could at least expand into Canada, but it looks like even there Uber is running into regulatory issues. They've been wise to let Kalanick's crew run headlong and act as the guinea pigs for the differences in local laws and market conditions around the world.
  - tuna-piano 10y ago
    It's wise for a company in an industry with strong network effects to purposely give up first mover advantage?
    - matthewmacleod 10y ago
      That's interesting - these are companies that I would consider to have minimal network effect. There isn't much of a barrier to both drivers and users installing and using both services. It seems like a pretty workable idea to let Uner take the first-mover regulatory risk then follow them into the market and clean up.
      - JumpCrisscross 10y ago
        > these are companies that I would consider to have minimal network effect Gett raised $100 million [1], designed a decent app and put up a bunch of billboards all over Manhattan. I tried to use it for over a month. The drivers were friendly, the cars were wonderful and the rates were great. But the waits were like 20 minutes. Haven't used it since. [1] https://www.bloomberg.com/news/articles/2016-11-30/uber-rival-gett-receives-100-million-from-russia-s-biggest-bank https://www.bloomberg.com/news/articles/2016-11-30/uber-riva...
        k-mcgrady 10y ago
        Sounds like a bad launch (lots of marketing - leading to lots of users - when you don't have the drivers to handle it) and pretty easy problem to solve.
      - deleted 10y ago
        [deleted]
- bernardlunn 10y ago
  Yes but Uber already lost in China.
bernardlunn 10y ago
They are both private, so its academic, you cannot invest. If the future of ride sharing is electric self driving, buy Tesla or Google (or Apple, their car cannot be too far off).
- nerfhammer 10y ago
  GM has a large stake in lyft. So in theory you could invest in GM...

by brentm 10y ago

SubiculumCode 10y ago

Lyfts biggest problem is the media's tendency to refer to the industry as Uber. Kind of like search is to Google, and wiping noses is to Kleenex.

drwl 10y ago
related: http://english.stackexchange.com/questions/7235/what-is-a-word-phrase-for-using-a-term-for-a-popular-special-case-instead-of-a-g http://english.stackexchange.com/questions/7235/what-is-a-wo...
- SubiculumCode 10y ago
  glad to know that there are so many terms for the phenomenon.

pisarzp 10y ago

You can't forget the difference in scale. Lyft is only in USA, while Uber is a global company. For them to enter Europe/Asia now, would mean tremendous investment.

prostoalex 10y ago
Would be interesting to know if revenues and profits match that valuation at the same 10x coefficient.
- pisarzp 10y ago
  Uber seems to be in 581 cities [1] while Lyft in 200 [2]. So this is 3x difference. However, Uber is more global, therefore has much more large cities around the globe. It wouldn't be unreasonable to assume that on average cities are 2-3x larger. This alone could justify valuation gap. I would also assume that because of global presence, Uber has higher usage due to travellers. [1] http://uberestimator.com/cities http://uberestimator.com/cities [2] http://www.theverge.com/2017/1/25/14383370/lyft-expansion-new-cities-list-2017-far-cuts http://www.theverge.com/2017/1/25/14383370/lyft-expansion-ne...
  - prostoalex 10y ago
    Agreed, but from financial perspective the distinction between "profitable cities" and "subsidized cities" is important. As UberChina experience shows, the expansion (to 100 cities, no less https://www.cnet.com/news/uber-pledges-to-expand-to-100-more-chinese-cities/ https://www.cnet.com/news/uber-pledges-to-expand-to-100-more... ) is costly and sometimes turns out to be never sustainable.
aetherson 10y ago
Tremendous investment towards very uncertain results. Asia in particular -- what exactly is the point of investing in Asia? Uber got kicked out of China, and besides Japan, what other market is really worth investing in there for a company that constantly struggles with unit margins? I think I agree that Lyft is the better opportunity right now to Uber based on valuations -- while Lyft is clearly the less valuable company, it's hard for me to believe that it's 10x less valuable. 5x? Sure. But that makes Lyft twice as good an opportunity as Uber. Unfortunately, I think that both companies are most likely doomed. Uber almost certainly, Lyft maybe a little less certainly. There really isn't much sign that there's a $7B business in ride sharing, much less a $70B business.
- pisarzp 10y ago
  I beg to differ here. Once you get the scale like Uber, and you don't have to spend billions on marketing, this is a very high margin business. Minimal costs to maintain infrastructure and 20% cut on millions of ride's a day. The only reason Uber was struggling is because it wanted total global domination. It was a land grab, and they played it quite well. Failed in China, but succeeded in quite large portion of the globe.
  - aetherson 10y ago
    This is a very 2015-era comment. We've seen a lot of evidence over the last year-and-a-half that it's just not true that Uber's only expenditures are on expansion. I think that this is the reality: 1. There are lots of reasons why customers may not take an Uber. They could take a Lyft, they could take their own car, they could take public transportation, they could take a taxi, and they could in many cases just not go out or substitute a closer destination. 2. Uber achieves high ride volumes in the face of #1 by heavily subsidizing both drivers and passengers, even in the case of relatively mature markets. This drives their profit margins down to extremely thin levels, or in fact negative. 3. Their proposed technological solutions to their margin problem have either not been broadly popular (Uber Pool) or have major roadblocks to even existing (self-driving cars). 4. Their proposed business model solution to their margin problem (being a logistics company) have the problem that nobody wants to be their customer. 5. All of the above are true even in the developed world, where a ride might average $15 and Uber's cut before subsidies might average $3. All of their expansion opportunities now (and in the last few couple of years) are in areas where a ride might average $5 and Uber's cut before subsidies might average $1 (or worse), making it harder and harder to recover the relatively fixed costs of expansion. 6. There is obviously a profitable business in being a taxi company. It's just not a $70B business, and indeed I'm not sure it's a $7B business.
Apocryphon 10y ago
Lyft could at least expand into Canada, but it looks like even there Uber is running into regulatory issues. They've been wise to let Kalanick's crew run headlong and act as the guinea pigs for the differences in local laws and market conditions around the world.
- tuna-piano 10y ago
  It's wise for a company in an industry with strong network effects to purposely give up first mover advantage?
  - matthewmacleod 10y ago
    That's interesting - these are companies that I would consider to have minimal network effect. There isn't much of a barrier to both drivers and users installing and using both services. It seems like a pretty workable idea to let Uner take the first-mover regulatory risk then follow them into the market and clean up.
    - JumpCrisscross 10y ago
      > these are companies that I would consider to have minimal network effect Gett raised $100 million [1], designed a decent app and put up a bunch of billboards all over Manhattan. I tried to use it for over a month. The drivers were friendly, the cars were wonderful and the rates were great. But the waits were like 20 minutes. Haven't used it since. [1] https://www.bloomberg.com/news/articles/2016-11-30/uber-rival-gett-receives-100-million-from-russia-s-biggest-bank https://www.bloomberg.com/news/articles/2016-11-30/uber-riva...
      - k-mcgrady 10y ago
        Sounds like a bad launch (lots of marketing - leading to lots of users - when you don't have the drivers to handle it) and pretty easy problem to solve.
    - deleted 10y ago
      [deleted]
bernardlunn 10y ago
Yes but Uber already lost in China.

bernardlunn 10y ago

They are both private, so its academic, you cannot invest. If the future of ride sharing is electric self driving, buy Tesla or Google (or Apple, their car cannot be too far off).

nerfhammer 10y ago
GM has a large stake in lyft. So in theory you could invest in GM...