Tina Bellon

(Reuters) – Lyft Inc (NASDAQ) is worried that it will continue to ride the narrow route of the ride-hail system, while its bigger competitor Uber Technologies (NYSE) Inc looks at more lucrative options such as the possibility of becoming a giant food delivery service during the pandemic.

Lyft shares fell more than 30% after its earnings report raised questions about whether the company could be competitive with Uber.

While both tech companies have seen their shares plunge since going public in 2019, Uber and Lyft are down over 70%.

Graphic – Uber and Lyft struggle to hold stock market value : https://fingfx.thomsonreuters.com/gfx/mkt/gdpzyagwqvw/Pasted%20image%201651851998260.png

Analysts had worried that Uber Eats’ 2014 launch would not make it a success. The pandemic made it more valuable as an increase in food delivery orders outweighed a falling ride-hail demand.

Uber’s freight trucking business saw an increase in revenue thanks to a $2.25 Billion acquisition of a logistics firm.

Lyft also has scooter- and bicycle-sharing networks. However, Lyft does not split out any revenue.

Graphic Uber’s revenue outstrips Lyft’s – https://graphics.reuters.com/UBER-LYFT/INVESTORS/zjvqkmgoxvx/chart.png

Lyft made operating profit quarters earlier than Uber. However, Uber’s ride-hailing business was already profitable on an operational basis for many years, according to adjusted Earnings before Interest, Taxes and Depreciation (EBITDA). Uber’s operating profit was greater than Lyft’s in the most recent quarter.

Uber has ambitious ambitions to be a global transport hub, and its strategy of diversification into different sectors is well-received.” Hargreaves Susannah Streeter is a Lansdown analyst (LON).

Graphic : Uber’s ride-hail service is more profitable – https://graphics.reuters.com/UBER-LYFT/INVESTORS/zdvxogwjnpx/chart.png

Uber’s significantly higher operating profits from the ride-hail segment is partly due to its pricing strategy. It charges per mile more than Lyft for trips in the United States.

Although both companies set prices in similar amounts and times, Lyft has charged 10% less per-mile than Uber. YipitData analysed email receipt data.

They also have different average drivers’ salaries. Uber reported that those who drove for longer than 20 hours per week made an average salary of $39/hour in the first quarter. This includes tips, fuel surcharge and tipping. Lyft put the average March earnings of drivers at $24, including tips and a $55 per-ride fuel fee.

Graphic – Uber ride-hail prices outstrip Lyft’s: https://graphics.reuters.com/UBER-LYFT/INVESTORS/zdvxoggngpx/chart.png

Uber has grown its customer base by offering food delivery. Many of these customers then use Uber’s app to book rides.

Lyft has experienced a slowdown in user growth. Lyft’s first quarter active riders are 13% less than in the post-pandemic year 2019. Uber’s customer base grew by 23% over the same period.

Graphic – Uber’s active user base shows faster growth: https://graphics.reuters.com/UBER-LYFT/INVESTORS/gdvzyaemkpw/chart.png

Uber’s large investments in delivery and freight have made its cash pile less than Lyft.

Uber’s unlimited cash balance is just a third off its peak in mid-2019. Lyft has twice the amount of Uber’s cash, despite being significantly larger.

Uber told investors Wednesday that 2022 will mark the beginning of Uber’s full-year cash flow. This is its first positive year since 1993.

The pandemic caused significant cash burn in both companies.

Graphic – Uber’s shrinking cash pile is still larger than Lyft’s : https://graphics.reuters.com/UBER-LYFT/INVESTORS/byvrjndqnve/chart.png