Analyst Sees 'Gap In Profitability' Emerging Between Uber, Lyft

It was a bumpy ride for Uber Technologies Inc UBER and LYFT Inc LYFT investors in 2019, but the ride-hailing stocks are off to a hot start in 2020.

On Sunday, New York City released ridesharing data for the month of December, and Bank of America analyst Justin Post dug into the numbers looking for trends that investors need to know.

Uber, Lyft's Big Apple Numbers

Uber reportedly conducted 15.1 million rides in New York City in December, up 0.5% from a year ago. At the same time, Lyft conducted 5.43 million trips, up 15.6%.

For the entire fourth quarter, Uber generated 45.2 million New York trips, up 2.2%.

Post also released the latest numbers from Bank of America’s proprietary ridesharing price tracker. For the first quarter of 2020, the analyst estimates cost per mile for Uber is $6.08 per mile in New York City compared to $6.13 per mile for Lyft. In San Francisco, Uber’s cost per mile is $3.31 compared to $3.11 for Lyft.

In Los Angeles, Uber riders pay an average of $1.75 per mile compared to $1.79 for Lyft riders.

“On Uber, prices are down q/q across all US markets we track, with Uber now less expensive than Lyft in half of the US markets we track (vs. more expensive across all markets last quarter),” Post said.

The good news for Uber investors is that Post said he's seeing evidence that Uber’s push toward more profitable UberX rides could be creating a “gap in profitability” between Uber and Lyft.

The analyst said he is seeing no evidence that California’s AB5 law is driving prices significantly higher just yet.

Bank of America has a Buy rating and $49 price target for Uber.

Benzinga’s Take

Both Uber and Lyft have demonstrated progress in trimming down losses in recent quarters. Yet both companies will have to prove that they are on a path toward a realistic, sustainable business model before they are safe long-term investments.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

Related Links:

Lyft Analyst Turns Bullish, Expresses Confidence In Ride-Hailing Model

What Tesla Investors Can Learn From Where GM Was 100 Years Ago

Photo courtesy of Lyft.