The battle of relevant ride-sharing companies has dwindled down to two fierce rivals: Uber and Lyft. These two companies have gained notoriety for their revolutionary transportation services and record valuations. As of now, Uber clearly maintains a larger market share than lyft; moreover, its $50 billion valuation has tied Facebook’s (FB) previous record as the most expensive private company to date. While Uber has many advantages, there is no reason to disregard Lyft as a viable competitor, especially since famed billionaire Carl Icahn just invested $100 million into the company.
Building on this, Lyft also recently raised $50 million in VC funding, bringing its total fundraising to over $680 million since March 2015. To date Lyft has raised a total of $1 billion from celebrities, entrepreneurs, and venture capitalists alike. Nevertheless, whereas Uber's valuation is $50 billion, Lyft is valued at only $2.5 billion (which is also impressive).
While Uber is valued at $50 billion, the company's numbers do not currently support this figure. In analyzing Uber's revenues, and other fundamental growth metrics, one will notice that Uber's success is a highly speculative bet; investors hope their overpriced gambles turn into lucrative long-term gains. However, internal and external forces have hindered Uber’s ambitions. The company has faced endless legal issues throughout its short existence. Customers have become increasingly worried about using Uber due to its lackluster background check process. For example, Uber is currently fighting allegations that one of its drivers sexually assaulted a passenger in India. Not to mention that state governments, like those of Thailand and Germany, have also outlawed Uber's service within their borders.
Although Lyft lacks a comparable customer base, it has many more admirable qualities than Uber. Firstly, Lyft maintains a much more rigorous background check process. This provides Lyft customers a sense of ease. Lyft also prides itself on customer loyalty and liveliness. The company promotes community spirit and friendliness, thereby allowing drivers to better interact with customers. Furthermore, Lyft is considerably cheaper. Uber’s popularity often results in “surge pricing” that makes trips far more expensive. As Uber continues to push "surge pricing," evermore consumers will switch to Lyft.
Regardless of its past legal issues, Uber is still king of the ride sharing market (for now). Uber has raised far more capital than Lyft (nearly a $5 billion difference) and has more drivers in its arsenal. As such, Uber can generate substantially higher revenues. Uber is also more differentiated than Lyft. For instance, its "Black Car” service is tailored to professionals, whereas UberX is for everyone. Moreover, and perhaps most importantly, Uber is also the premier choice among college students and Millennials. Its popularity has increased to the point that “Ubering” is now considered a verb. Hopefully Lyft's niche market continues to compete with Uber; otherwise the ride-sharing industry will effectively reflect a monopoly.