Ridesharing

Uber Q1 Earnings Call Touts Rational Market; Lyft Shares Rise

Uber Q1 Earnings Tout Market; Lyft Shares Rise

In an earnings call on Friday (May 31), Uber CEO Dara Khosrowshahi said the company was optimistic about the ride-sharing market and the competition within it. Lyft shares rose following the news, according to a report by CNBC.

Lyft shares went up more than 5 percent, and Uber’s stock also was positive. The rise pushed Lyft’s stock value to upwards of $800 million, with a market cap of around $16.8 billion. Uber’s market cap is about $67 billion.

In the call, Khosrowshahi said Uber and Lyft executives both agreed the market was more rational for the two companies. “I think that competing on brand and product is – call it a healthier mode of competition than just throwing money at a challenge,” Khosrowshahi said.

Both Lyft and Uber have dealt with some losses as they have tried to lure customers to their respective platforms. In the last quarter, Uber saw a net loss of around $1.01 billion, while Lyft’s adjusted per-share loss was $9.02.

Lyft President John Zimmer said that since he started the company, “you can see that as a percentage of revenue, this is the most rational the market has been.” He interpreted that as consumers making decisions based more on the brand they prefer rather than on price.

While analysts seem to agree, they are taking it in at a distance, and waiting to see what will happen.

“While there is no guarantee that this will last, we believe that over the next 12 months, both will focus more on competing via service innovations (micro mobility, loyalty, etc.), which should provide a significant tailwind to Uber’s unit economics,” Atlantic Equities analysts wrote on Friday (May 31). The company did, however, upgrade its Uber rating from neutral to overweight.

Others exhibited a similar attitude, like DA Davidson analysts, who wrote that “a more rational promotional environment is certainly a key positive, but only time will tell whether Lyft’s healthier brand is a sustainable competitive advantage and/or whether Uber’s relatively larger scale will drive meaningfully better rider/driver experiences.”

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