Adding to Uber’s ever-expanding series of recent woes is a new need to look in its rearview mirror. Lyft, its long competitor in the ridesharing game, is coming up quick behind it.
Often written off as an “also ran” in the race with Uber, Lyft has been the beneficiary of Uber’s very public series of troubles including accusations of sexism by female workers, the absence of CEO Travis Kalanick, and a lawsuit with Google over self-driving car technology. Uber’s U.S. market share has dropped from 84 percent at the beginning of this year to 77 percent at the end of May, according to data from Second Measure, a research firm that uses anonymized credit card data. Uber’s sales are still growing — Q1 revenue was $3.4 billion, triple the 2016 figures for the same time of year.
But that growth is slowing, and investors are concerned that Uber, for all its promise, also has some real problems that may make going the distance difficult for the startup.
Moreover, on the global stage, Uber has had difficulty facing off with services like Ola in India and Grab in Southeast Asia. And in platform businesses, where networks effects are everything — being the biggest player in the game come with significant advantages.
“Investors are worried that Uber may be self-destructing to some extent,” said Santosh Rao, head of research at Manhattan Venture Partners. “At such a high valuation it was priced for perfection,” he adds.
Uber’s annual growth in the U.S. slowed to 40 percent at the end of May, from 55 percent at the same time last year.
Lyft, on the other hand, has grown into 150 new cities this year and snapped up $600m in fundraising in April. The firm’s revenue last year came out at $708m — one-ninth of Uber’s. But it has slowly gained marketshare as Uber has lost it — and has seen its bookings increase sharply. April had booking up 135 percent year over year.
Lyft’s biggest success in its hometown of San Francisco where it owns 40 percent of the market. Uber is also headquartered there.