Uber Holds the Edge on Wait Times Despite Lyft's Aggressive Pricing, Says Analyst

DA Davidson analyst Tom White reiterated a Buy rating on Uber Technologies, Inc UBER with a price target of $64.

The analyst rerated over the past six weeks after comparing quoted trip prices and wait times for UBER vs. its primary U.S. rideshare competitor, Lyft, Inc LYFT. He also analyzed both companies' Sensor Tower mobile app and engagement data trends.

LYFT's quoted rideshare prices were generally lower than UBER's throughout August and September by ~3.5% based on White's weighted average analysis for trips in the top 20 largest U.S. cities. 

After conducting similar weighted-average pricing analyses over the past six weeks, the analyst said that LYFT appears to have priced its rides more aggressively than UBER since the end of July. 

Out of the 20 cities he analyzed, LYFT's quoted pricing averaged lower 62% of the time over the past six weeks, with UBER lower 38% of the time. 

Interestingly, if he focused solely on trips to the leading airports in these 20 cities, Uber's quoted prices were somewhat more competitive and, at times, towards mid-August, solidly cheaper than Lyft's. 

UBER is still consistently and meaningfully winning on wait times. His comparison of trip quotes on the Uber and Lyft apps in the top 20 U.S. cities shows that LYFT's wait times have remained significantly longer than those quoted on the Uber app for the same trips over the past six weeks. 

Overall, LYFT's quoted wait times have averaged 37% longer than UBER's since late July, equating to 2 minutes and 20 seconds of additional waiting for an average trip. LYFT's quoted wait times have become increasingly less competitive in recent weeks.

On LYFT's 1Q earnings conference call, new CEO David Risher indicated that LYFT had started making incremental investments in lower rider pricing and improved service levels/Driver earnings. 

LYFT first reduced its base pricing in January but made more substantive reductions in early March.

 Since then, White has been monitoring whether LYFT's more competitive pricing has resulted in any meaningful change to LYFT's growth trajectory. 

Price Action: UBER shares traded higher by 2.75% at $48.54 on the last check Monday.