Lyft or Uber Stock: Which Is the Better Investment?
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Kristopher Kane
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Amber Barkley
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Investing in ride-sharing companies may seem like a no-brainer. Ride-sharing stocks have climbed steadily over the past few years, with the two biggest names — Lyft and Uber — up more than 20% this year alone.
If you’re like many investors, you may be wondering which ride-sharing giant promises a destination with greater returns and more profits. Both Lyft and Uber have their particular selling points, but both also have potential drawbacks you should be aware of. Keep reading for a more in-depth look at investing in Lyft or Uber and which might be right for you.
Should You Invest in Lyft or Uber?
When choosing one over the other, it’s best to carefully consider the different selling points each offers. Lyft is positioned more as a purely ride-sharing company and has stayed within that niche. It hasn’t ventured into as many offshoots as Uber, which means the company is less exposed to the kind of market risks that Uber, which has branched off into freight, grocery and delivery services, may face.
Though both companies are projected to continue their upward trend in profitability and stock value, Uber’s more diverse range of offerings means there are more things that could go wrong. The leaner, more focused and straightforward structure pursued by Lyft could give it an edge in profitability over Uber.
On the other hand, Uber’s business diversification could give it an edge over Lyft, if general ride-sharing demand decreases — although both stock prices could take a hit in that case, Uber’s ability to continue with other aspects of its business might leave it in a stronger position.
Is Lyft a Good Stock To Buy?
If you’re considering investing in Lyft, you could do a lot worse. The ride-hailing company’s sales are expected to continue to expand this year by over 15%, and, though it’s early days for next year’s fiscal predictions, most analysts agree that the company will continue to be profitable.
Though annual earnings-per-share are expected to stay above $0.60 this year and next, forward-looking market gurus are saying Lyft’s stock may climb to almost a dollar earnings-per-share by the end of next year. While no stock is a sure thing, those are good odds and solid figures.
Is Uber Stock a Good Long-Term Investment?
If you’re looking for a buy-and-hold stock, Uber may have a slight advantage. While Lyft operates solely in the U.S. and Canada, Uber has a reach stretching over 70 countries. This much broader customer base could mean Uber will have an easier time providing investors with long-term stability and potentially higher profits over time.
Uber’s more diversified operations mean it’s about much more than just getting a ride across town. With the success of Uber Eats, it’s carved out a significant place in the food delivery market. The company has also made significant investments in driverless technology, which could be a boon for investors.
It could also prove to be Uber’s bane. Driverless tech is a long way from perfect, and the technology remains unproven on a large scale. There are many safety and legal liability concerns, and as such, it is an inherently riskier proposition. Any problems with this, or any other aspect of the company’s varied activities, could cause the stock to lose value.
How Is Uber Stock Compared to Lyft?
Comparing Uber stock to Lyft stock means more than just comparing their current stock prices. While Uber’s overall market cap dwarfs Lyft’s, it doesn’t guarantee better performance or a safer investment. Recent performance has shown a degree of volatility with both stocks.
Another thing to consider is that Uber has recently become a profitable company, leaving Lyft and many other delivery companies behind. Though Lyft is expected to become profitable in the short term, it’s still operating at a loss.
This is a common problem for growth-oriented tech firms investing heavily in expansion, development and customer acquisition. Though Uber is finally in the black, it’s anyone’s guess if it will continue its profitable trend.
Lyft vs. Uber: What Should Drive Your Decision
As with any investment, your choice between Uber and Lyft largely depends on your personal investment goals and risk tolerance.
If you prefer a company focused solely on ride-sharing and believe in its potential to turn profitable, Lyft could be your call. If Uber’s better numbers and more diverse offerings appeal to you, that could be the right choice — but remember that bigger isn’t always better.
No investment should be made lightly, and you should never invest more than you can afford to lose. Whichever stock you choose — Lyft, Uber or both — make sure your choices align with your investment strategy.
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