Lyft app downloads anticipated to miss estimates as competition with Uber heats up

Lyft stock was downgraded to Hold as the ridesharing company is projected to miss analyst estimates for app downloads amid increased competition with Uber.

Video transcript

DAVE BRIGGS: And closing things out with the rideshare names. Lyft and Uber both ending the day mixed, as you can see there, as Wall Street commentary trickles in ahead of each company's earnings release later this week.

Gordon Haskett analyst Robert Mollins downgrading Lyft to hold while maintaining a buy rating on Uber. He points to a few reasons why Uber is the better buy here. First off, he has concerns about Lyft's app downloads and is projecting 19 and 1/2 half million active riders in the quarter, about a million shy of estimates. Second, he says Uber has a more geographically diverse business model, therefore more shielded from legislation. And finally, while Lyft has been able to cut down wait times, it's charging about 10% more for rides than Uber. The most expensive ride probably won't be the favorite ride for consumers down the road.

That comes as a huge surprise to me. I'm one who checks out both apps before every ride. Often find Lyft is cheaper than Uber.

JARED BLIKRE: It's funny you say that. I have both. I almost never go to Lyft. Uber is usually good enough to me. Every once in a while when I get a really out-of-bounds Uber price, Lyft will kind of come to the rescue for me.

But here's what I'm finding. Bloomberg Intelligence has some-- has a good analysis and preview of these two earnings that are coming up. So I just want to take the Lyft tack first. "Lyft's muted active rider and driver supply growth"-- and those are key because you need riders and drivers-- "may continue to weigh on top-line expectation. Active rider gains could moderate to single digits in the fourth quarter. And then we believe the company may see further negative revisions for the 2023 consensus with its position likely getting weaker versus rival Uber in terms of driver supply and ride volume." So just not really competing in those key categories.

Now, Uber is a sprawling company-- not as sprawling and big as it used to be. It has other levers it can tap. So this is not an apples-to-oranges comparison, but in the pure-- in the pure mobility play, Uber is just really killing Lyft, and maybe it's because they're bigger and they can attack them on margins.

DAVE BRIGGS: Yeah, in particular Uber Eats a certain-- a huge differentiator for the two. And on the surface, you'd think they'd move together like cruise stocks. Anything but, really, when you look at Lyft is up more than 50% year to date. Uber still up more than 30%, but it only fell-- it's down around 9% over the last 12 months, whereas Lyft really got hurt, down more than half their market cap over the last 12 months. They do not move like the cruise stocks. They certainly appear to be headed in different directions. Interesting to hear these analysts' notes.

JARED BLIKRE: Yeah, and let me-- let's just go to the YFi Interactive one more time. I'm going to show you the heat map we have for mobility. And to underscore your last point there, Dave, Uber down 8 and 1/2% over the last year. Lyft down 54%, quite a bit more. And when you take a look at this chart, it has barely escaped the bottom end of this range here. Pretty nasty decline still in play. Has not crossed that Rubicon of that downward trend line.

And you take a look at Uber. It's in very slightly better shape. It's not great shape, but it has a bigger base, and it's gone beyond that negative trend line. So a little technicals there. Doing a little bit better for Uber.

DAVE BRIGGS: Man, I have theories. It's nice to have you bring the receipts because if I was wrong, that would have been a really bad chart there.