An Uber Lyft Update: Lyft gaining ground on Uber


(Bick Bhangoo) #1

Here is our weekly update to the latest information regarding Lyft and Uber.

Some basic statistics:

The third quarter of 2017 showed an exponential jump in Lyfts performance and market share in North America and a decline in Uber's hold of this market. This led to Uber's first decline in income and Lyfts highest quarterly increase in gains. This detail is seen all over The US including the east and west coast major cities. The data was compiled by Certify SpendSmart™ and presented in an infographic that we attach to this report, and here are the salient points.

  1. Uber dropped for the first time by 1% in North America since they started life.
  2. Lyft gained a significant rise of 8% in San Francisco
  3. NYC is the only city where the taxi's gained a 1% increase at the expense of Uber.
  4. Uber controls 56% of the market versus 34% by taxis which goes to show how hard the Taxi sector was hit by Uber.
  5. Taxies will lose more ground to Ride Sharing, as Lyft and other companies continue to steal from them.
  6. Ride prices have dropped due to steep competition

Pricing Details Customer Satisfaction

Taxi's: $29.52 < 4

Uber: $25.73 Between 4 – 4.5

Lyft: $19.20 Between 4.5 – 5

This basic table shows us that Taxis are the most expensive service with the lowest customer satisfaction rate, Lyft is the cheapest with the highest satisfaction rate, and Uber is in the middle. Based on this, Lyft will continue to gain ground; the question remains, will they maintain their customer satisfaction as well as prices.

One interesting insight is how customer satisfaction is price related; there is a direct correlation. Tips are also increasing in these services since they have been added to the apps.

Conclusions

Lyfts success is not due to direct competition on quality and quantity of service since both provide very similar services, but due to Ubers mistakes. In fact, not due to Uber's mistakes but to Uber's CEO's maverick antics that reached the media on a constant and monthly basis.

It might be OK for most people and even considered to be cute when a company upsets a whole sector and takes on the world. After all, Americans are proud of success stories, that's what the American dream is all about. Having stated this, what Americans don't like are villains, unless you're in a Hollywood revenge film.

Travis Kalanick might have passed public opinion a few times, but after five years of continuous upsets, lawsuits, sexual harassment charges, tax evasion issues, government tampering claims and hundreds of lawsuits being filed, it was obvious that these were not Uber mistakes. It was a well-defined and oiled machinery of possible deceit and confusion aimed at acquiring a fast-global position and providing good looking operational numbers for private investors. At the end of the day, when a company loses $3billion a year, people should start to ask questions.

It took a few months, from July 2107, to be exact when Travis Kalanick stepped down, to find a replacement. Ubers executive decided on Expedia's CEO Dara Khosrowshahi, and he accepted the challenge, and a challenge it will be.

Dara's first main challenge will be to restructure Uber's business model, analyze with of the many loss centers are only loss centers and cut them out. He will also have to find ways to stem the continuous growth in favor of strengthening Ubers hold in all the centers it currently has. The Uber concept is a sound one, the process that Kalanick used to reach such a megalomanic position was financially suicidal, and that is reflected in the company continuous $2-3 billion losses per annum.

What most people don't like to remember or don't know is that around seventy percent of all ventures close due to financial insolvency, or to put it in layman's terms, the idea is great, but it just can't sell. It appears to be the same case with Uber. Since Uber is a black hole for funds, it might need to be cut down to a more manageable size. We won't go into how we would do this, that's for the new CEO to figure out, and also take into account all the shit that's going to hit the fan once the government probes start to swing into full gear alongside the many high-profile lawsuits. One wonders what the new CEO thought he was doing when leaving his cushy job in Expedia for this driving (walking) disaster.

Evaluating Uber is a major issue, while it has been set at $70, the question of the day is; is it worth that? This company makes losses, it only makes losses, no matter how big its income, they are based on incorrect algorithms. If you cut out the subsidies what will you be left with? Another issue is assets. Uber might deploy millions of drivers, but they don't own them or their cars, so what is the corporate fixed asset value, if it even has one? Ubers dash to the riderless car sector is not enough to save it, the time required to develop a full network and eco-system for driverless cars s at least two decades out. Uber Eats and other delivery options are still too young to be effective, and the only thing that remains is to make the original purpose, the ride-share driving operation profitable.

There is still a big difference between the two companies, even in every state. Uber is constantly in the news and social media. Its corporate antics are still under constant debate, and the ever-colorful ex-CEO Kalanik is still being watched. Uber has branded its name, Lyft has yet to reach a brand level recognition. Lyft has a few million rides per year; Uber makes 10 million rides a day! Uber raised around $17billion and lost $b3 billion every year, while Lyft only raised $2.6 billion

Uber is a global company with access to resources far greater than Lyft. Uber also has a larger investment portfolio and marketing mix, however, intelligent usage of funds is what separates success from failure, and it doesn't matter how much money you have, if you don't spend it wisely, you become weaker than a smaller stronger positioned competitor. It is important to note that Uber has replaced their CEO with a more conservative one, that is better equipped to deal with steady market growth. However, with all the many legal issues, bad financial model sucking the coffers dry and problems with investors, Uber has to reach the IPO intact to survive.

Lyft started out with a steady progression and a no-nonsense approach. It went into the market with full knowledge it was going to compete with Uber and any other companies that might arise. Lyft managed to enter the market with enough time between Uber and anyone else to eradicate any real threats apart from Uber. Lyft's usage of its funding and its investors and investment portfolio, as well as its corporate climate and financial model, show a steady and continuous growth in the North American market. Lyft has no intentions of going global yet, it might do so I the future, but it has enough income in the US and Canada and will when it is ready, expand outwards


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