Uber Technologies Inc. (NYSE:UBER) and Lyft Inc. (NASDAQ:LYFT) are the two leading ride-hailing services. They face similar operating and regulatory environments. However, each of the two companies has continued to apply different strategies in global expansion. Though growth is expected for both stocks, investors would want to identify the better buy.
Lyft is trading at $33.39. On investment style, Lyft is rated B on growth with D and F scores on momentum and value respectively. Zacks Research recommends holding Lyft. On the other hand, Uber at a price of $31.22 is rated a strong buy with similar ratings on style.
The fair value estimate for Lyft is $66. For Uber, the fair value is $73. The two stocks are trading below fair value. On financial performance, Uber reported $17.455 billion in revenues last year, while Lyft reported $3.208 billion for a similar period. Both companies reported net losses in the last fiscal year, but Uber’s losses were lower.
There are various takeaways from this analysis. Uber is significantly larger than Lyft, yet prices are close. It also has better chances of returning positive earnings as growth continues. Fundamentally, Uber remains the better investment.
Uber returned lower capital losses than Lyft
Source – TradingView
The market returns of Uber and Lyft are highly correlated. For the period beginning September 2020, Uber lost 21.95% of its value. Lyft, on the other hand, lost 43.50%, which is twice as much as Uber. In a bullish market, it would still be expected that Uber performs better than Lyft.
Based on the analysis, both Uber and Lyft are selling at discounted valuations. Uber is fundamentally and technically a better performer than Lyft. Considering the returns of the two companies are strongly correlated, investing in Uber is better.