Uber and Lyft reported their second quarter earnings this month. Uber saw its largest quarterly loss, and Lyft raised its revenue outlook. But data shows the market share has barely moved in months. Uber still dominates, taking in 71 percent of U.S. rideshare spending in July, while Lyft captured 27 percent of the market.
Starting in August 2017, Uber’s share of the market excludes most Uber Eats transactions, though some are indistinguishable from Uber rides. Other rideshare competitors include Via and Juno, which claim just a fraction of the market. This analysis excludes business spending.
As both companies continue to grow, the overall U.S. rideshare market is still expanding, but the market share race hasn’t moved more than 2 percentage points in the past year. That stabilization has come under CEO Dara Khosrowshahi, who took over Uber after a series of controversies led the company’s previous CEO and co-founder, Travis Kalanick, to step down in June 2017.
The West Coast is one of Lyft’s strongest regions, while several of the metro areas where it’s most popular are in the Midwest. In San Francisco, Lyft brought in 37 percent of July rideshare spending, making it the company’s strongest metro area by market share among the top 15 most populous cities.
In addition to market share, Uber wins out on rider engagement. Riders who use both Uber and Lyft typically spend more on rideshare each year than riders who are loyal to a single service. And, on average, these riders who hail cars on both services spend more with Uber than Lyft. In the past year, the average rider of both Uber & Lyft spent $460 with Uber, 53 percent more than was spent on Lyft.
What lies down the road
Though slowing growth may be concerning, rideshare companies have maintained investor appeal. From food delivery to driverless technology, Uber and Lyft are at the forefront of changing how we get around.
Uber’s successful foray into food delivery has surprised its own CEO, and Uber Eats is perpetually in the top three U.S meal delivery companies by sales. As the market for app-driven food delivery continues to expand, Uber’s logistical data and network of drivers provide an advantage in new markets.
Uber and Lyft have also segued into scooters and bikeshare. Both rideshare companies aspire to become a one-stop shop for all things transit, making last-mile solutions an integral component of that vision. Uber acquired Jump Bikes and, in March 2019, announced plans to launch its own custom scooters. Lyft followed suit by acquiring Motivate—the company behind Citi Bike and Ford GoBike—and beat Uber to launch of an inaugural scooter fleet in September 2018.
Bird and Lime saw rapid growth through much of 2018, but weather and tourism have contributed to a seasonality trend for scooters, with an expected decline of sales during winter and a big rebound in summer. The race for leadership in last-mile transit is still wide open, as new partnerships and regulations shift the landscape. Both Uber and Lyft were issued a blow in August 2018 when San Francisco denied their applications to rent scooters in the city, instead granting permits to Scoot and Skip. Spring 2019 has increased both sales and activity for the scooter industry. Bird returned to San Francisco in April and, in June, acquired competitor Scoot.
The merging of Bird and Scoot means Bird may be able to offer an additional service in San Francisco, although Scoot would require separate approval. The combining of the two companies will offer better service for customers and potentially replace some car trips.
While scooter startups are scoring multi-billion-dollar valuations, the real golden goose is miles down the road. Uber and Lyft are both heavily invested in bringing driverless cars to market. Despite major setbacks—including a fatal accident—Uber continues to press forward with help from an August 2018 investment from Toyota. Lyft has also been working toward a driverless future and announced a new partnership with Magna in March 2018. While autonomous vehicles would be a game-changer for the profitability of rideshare, that reality may be further from reach than previously believed.
Rough roads traversed
Uber’s reign over the rideshare market has not been short on struggle—or controversy. The company has long faced public scrutiny over how fares are determined and how drivers are treated. Then, in January 2017, the #DeleteUber campaign kicked off what would become a rocky year. The hashtag went viral when Uber was accused of crossing the picket lines during a politically-motivated taxi strike, and Uber’s market share dropped 5 percentage points in a single week.
The #DeleteUber ordeal was followed by legal struggles, starting with accusations of stealing trade secrets from self-driving technology competitor Waymo, which were eventually settled in February 2018. Uber also found itself in hot water when its Greyball program made headlines. A tool used to cloak Uber’s activity in areas where it was not authorized to operate, Greyball exemplified the rule-bending culture that would breed further troubles for Uber.
Uber’s internal struggles peaked when a tell-all blog post led to a company-wide investigation into discrimination and harassment. The revelations of its toxic culture were far-reaching, and the continual bad press culminated in Kalanick’s resignation. After his departure, Kalanick reportedly meddled with the hunt for his replacement and, in August 2017, Benchmark Capital—a top Uber investor—sued Kalanick over his interference. Khosrowshahi was hired later that month.
A new CEO and 2018 brand overhaul have helped Uber clean up its image, but the core challenges of its business remain. Squeezing money from rideshare is expected to get harder, as major cities—like New York—have moved forward with proposals to add surcharges to fares and cap the services’ allotment of active vehicles.
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