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The market seems to be confused by Lyft and Uber, two carpool competitors that went public earlier this year.

The prices of both companies have fallen by about 20% from the price of IPOs – considering that 2019 is a good year for IPOs, this performance is not impressive – but strangely, the two The company’s share price tends to rise simultaneously. The market seems to think that what is good for one party is good for the other, as well as for bad things, even though the two companies are fierce competitors. This model was recently demonstrated when the two companies announced their second quarter results.

Lyft’s results were announced after the close on Wednesday, August 7, and the two car companies’ stocks rose sharply in the next day’s trading. Investors are pleased to see that Lyft broke its expectations for the quarter and improved its expectations for full-year results. But what really made them raise the stock prices of the two companies is that Lyft said that prices are starting to rise. This signal suggests that the price competition between the two companies may be easing, which means that earnings may not be as worried by some people. distant.

Lyft shares rose 9.3% for the first time and closed up 3%. At the same time, Uber shares surged 8.2% due to news that the price war may have cooled. After the close of the day, Uber announced its quarterly results. In the second day of trading, the two companies fell, because Uber’s second quarter data only included 14% revenue growth, and adjusted EBITDA. Earnings before sales (EBITDA) losses more than doubled from the same period last year, reaching $656 million. Uber’s share price fell 6.8% on Friday and fell 7.6% on Monday, August 12. At the same time, due to Uber’s performance, Lyft’s share price plummeted 9.5% in two trading days.

Although the market doesn’t think so, Lyft and Uber are moving in very different directions. Lyft is still growing at a rapid rate, with revenue up 72% in the second quarter, while Uber is stagnating; the company’s revenue in the most recent quarter has only increased by 14%, through exchange rate conversion and IPO-related driver bonus adjustments. The increase was 26%. Although Uber strives to shift its focus to Uber Eats, its revenue from its main business carpooling service has only increased by 2%.Machine rewards increased by 17%.

Uber and Lyft’s valuations are overrated according to traditional metrics, but Lyft seems to be a better choice now. In addition to growing much faster, Lyft has many advantages over larger competitors.

Lyft is expanding market share

Based on Second Measure data, Uber is still the leader in the US carpool market, accounting for approximately 70% of the US domestic market. After the crisis of 2017, Uber has basically stabilized.

However, the latest round of results shows that Lyft continues to dominate the competition with Uber. The two companies’ revenue growth in the second quarter was almost the same. Lyft’s revenue grew by $362.4 million and Uber’s revenue grew by $398 million. According to Uber’s adjusted income data, the company’s revenue increased by about $700 million.

But investors should remember that Lyft’s main business in North America is carpooling, although it also has several shared bicycle networks (after the acquisition of Vios last year) and an emerging scooter business. On the other hand, Uber’s business is global. Uber Eats is an emerging freight business that acquired Jump last year and acquired Lime in 2018 with an investment of $335 million to acquire shares in Micro Mobile (small motorcycles and shared bicycles).

In North America, Uber’s revenue for the quarter increased by $283 million, a significant portion of which appeared to come from Uber’s catering business. This shows that Lyft is still growing at a faster rate in its only market currently operating.

Lyft is led by the founder and mission-driven

Karanic has several consequences after he is in charge of Uber. The reckless entrepreneur, regarded by investors and venture capital firms as “natural forces,” instilled in the company a mentality to win at all costs. Khosrowshahi has been working hard to repair Uber’s image of bullying and defying the law.

He seems to often defend himself at the company’s most ambitious time, and he has plenty of cash after a generous IPO. Uber’s debut appeared to be a weak performance, as Khosrowshahi continued to lower expectations. While most companies are trying to set their IPO prices as high as the market can afford, Uber’s approach is the opposite, after the initial announcement of a price range of $44 to $50 per share. Uber is priced at only $45. Today, a Wall Street banker who once valued $120 billion has a market capitalization that is less than half of that figure; last Friday, the company had a market capitalization of $59 billion.

In Uber’s prospectus, Khosrowshahi often goes to the publicThe company apologized for its past actions and promised to do better.

Kosroshahi faces a challenging job: managing the needs of drivers seeking higher pay and benefits, customers who want low prices and quality services, and investors who want to see growth and profitability. After the turbulent Karanic era, he had to repair the relationship and the company’s reputation, while also dealing with critics who still aspire to the return of Karanic, which would only make things more difficult.

Lyft is not facing such a dilemma. In contrast, the company’s founders, John Zimmer and Logan Green, have an excellent reputation and the company is often considered a friendlier of the two carpooling services. This is the first time that a driver is allowed to tip; its “peak hour price” is generally milder; the fundamental innovation in launching a carpooling service is Lyft, not Uber, where drivers can drive themselves. In the early days, Uber was just a luxury black car service.

Lyft’s mission statement is also much clearer and easier to implement than Uber. According to Lyft’s prospectus, its mission is to “improve people’s lives with the best transportation in the world.” This is a simple statement, but it can change the world, especially when you imagine a self-driving car taking off. Uber’s mission statement is very vague and basically doesn’t make any sense: “Ignite the opportunity by letting the world work.” I don’t know what it means, and I don’t think Uber can do it.

It’s worth noting that Uber doesn’t focus on carpooling like Lyft. Businesses like Uber Eats, Uber Freight, and Uber Copter may attract investors with growth ideas, but this strategy may also distract the company’s core business carpooling and its potential profitability. Khosrowshahi has a wide range of ambitions, so it’s no surprise that he likes to compare Uber with Amazon, but at this point, it seems doubtful that Uber can catch up with Amazon’s growth.

Lyft continues to be led by the same two people who created the company, which seems to be a clear advantage for the second-ranked carpooling service company, as well as its clear mission statement.

Lyft is in a more favorable position in the autonomous driving revolution

Automakers and technology companies are trying to design cars that can drive safely in the environment that human drivers face, but they find this challenge extremely difficult.

However, technology will always get better, and it seems that one day autonomous vehicles (AVs) will become mainstream, even if it takes longer than many technologists thought a few years ago. This shift may be gradual, not sudden, and Lyft seems to be more prepared than Uber.

LyFt has significantly more cooperation with AV technology companies and automakers than its main competitors, in part because Lyft is able to attract partners with a reputation that is more trustworthy than Uber. Lyft has partnered with AV technology company Aptiv, and by May next year, Lyft will provide more than 50,000 self-driving cars in Las Vegas.

In addition, GM is a major investor in Lyft, which spent $500 million in 2016 to acquire a 9% stake in Lyft. GM’s AV division is currently worth $19 billion, a sign that the company will be an important player in the field of autonomous vehicles. Although GM’s partnership with Lyft currently seems to be dormant, as long as it is still a Lyft investor (currently holding more than $1 billion in Lyft), both parties may engage in meaningful collaboration on AV at any time. Recently, Ford also said that it will cooperate with Lyft to make AV mainstream.

On the other hand, Uber is best known for the involvement of self-driving cars. In March 2018, an Uber’s AV crashed into a woman crossing the road in Tempe, Arizona. The first and only one pedestrian death caused by autonomous vehicles. This caused the company to suspend the 8-month AV road test.

Uber has established a partnership with Toyota, which seems to be the only major collaboration between Uber and an automaker or AV technology company. Last year, Uber received a $500 million investment from the Japanese automaker, and the two companies promised to deliver autonomous vehicles by 2021. However, in terms of avr correlation, Lyft is clearly the winner.

Lyft not only has more partners than Uber, but as the second largest carpooling service, Lyft is more attractive to car manufacturers and AV technology companies. Compared to Uber, Lyft is much less threatening to them, and some people think Uber is a greedy monopolist.

From the comparison of the top two companies, it is clear that Lyft is growing much faster than Uber, has a management team with a better track record, and has a certain level of understanding of their future. What Uber lacks. Finally, Lyft’s stronger reputation and positioning make it possible to build a large number of partnerships with companies that are most likely to implement autonomous vehicles.

The two companies are losing cash, and the valuation is still too high considering their own risks, but it seems that the acquisition of Lyft seems to be a better choice.