UBER, LYFT, or DASH? Which Mobility/Delivery Company Offers the Best Investment Potential?

In this article, I will compare three leading companies in the mobility and delivery sectors—Uber (UBER), Lyft (LYFT), and DoorDash (DASH)—with the assistance of the TipRanks Stock Comparison Tool. I am bullish on Uber and DoorDash due to their solid growth, despite stretched valuations. Conversely, I hold a neutral stance on Lyft because of concerns about its growth potential and high short interest, even though it trades at discounted multiples. Ultimately, I believe Uber’s stronger profitability make it the best investment choice.

A Closer Look at Uber

I have a bullish outlook on Uber, the leading rideshare company operating in over 70 countries. It’s size gives it a significant advantage over competitors like Lyft. Uber’s diversification into food delivery (Uber Eats), previously shifted its revenue composition. The Mobility segment, which accounted for about 70% of revenues in Q1 2020, now represents only 57%; reflecting the company’s increasing focus on Deliveries. Notably, Uber reaching operating profitability in 2023, after years of large losses following its IPO in 2019.

Uber’s stock is trading at all-time highs, buoyed by impressive Q2 earnings. Mobility gross bookings rose by 23% to $20.6 billion, while delivery gross bookings increased by 16% year-over-year to $18.1 billion, highlighting strong consumer demand and a rebound in mobility services.

The expanding customer base is another key growth driver, with monthly active users climbing to 156 million, up from 137 million last year. This growth helps boost gross bookings across Uber’s services. Looking ahead, Uber anticipates gross bookings of $40.25 billion to $41.75 billion for the next quarter, reflecting a solid YoY growth rate of 18% to 23%.

Is Uber a Buy, Hold, or Sell?

I maintain a bullish outlook on Uber, especially given Wall Street’s recent EPS revisions, which reflect 18 upgrades and only three downgrades.

Uber currently trades at a forward non-GAAP P/E ratio of 38x, much richer than the peer average of 20x. However, this premium valuation is supported by Uber’s strong growth potential, with a consensus three to five-year CAGR estimate of 46% resulting in a forward PEG ratio of 0.83x. On a PEG ratio basis UBER stock trades at nearly an 60% discount to the industry average. As a growth stock, Uber is positioned at the forefront of disruptive technologies, including autonomous vehicle initiatives.

At TipRanks, Uber is rated a Strong Buy, based on 30 Wall Street Buy ratings and one Hold rating in the past three months. The average UBER price target of $89.31 represents about 8% upside potential.

A Closer Look at Lyft

I hold a neutral position on Lyft, the second-largest ride-sharing company, often seen as “Uber’s smaller sibling.” Lyft focuses primarily on the U.S. and Canada and has a market cap of $5.45 billion. While Lyft’s stock has risen 25% over the past twelve months, shares remain about 80% lower that their all-time high in March 2021.

In the last five years, Lyft has achieved a revenue CAGR of 12% but continues to struggle with profitability. The company’s recent efforts have prioritized user experience over profits, exemplified by the introduction of Price Lock, allowing users to secure ride prices in advance.

In Q2, Lyft reported its first profitable quarter, with a net income of $5 million (an improvement from a loss of $114.3 million last year) alongside a 41% revenue increase. Lyft recorded 23.7 million active riders, a 10% YoY increase, and reached an all-time high of 205 million rides. However, for Q3, Lyft’s guidance for gross bookings growth of 13-15% fell short of the 15% CAGR (for the 2024-2027 period) previously presented at their Investor Day. That raised some investor concerns.

Is LYFT a Buy, Hold or Sell?

I maintain a neutral outlook on Lyft, while analysts have expressed bearish sentiments with only four upward and 17 downward EPS revisions over the past three months. Unlike Uber, Lyft has underperformed this year due to growth concerns amid a tough macro environment. With a high short interest of 14.7%, traders may be positioning long in Uber while shorting Lyft.

Valuation-wise, Lyft is attractive, trading at an EV/Sales ratio of 1x compared to Uber’s 4.5x. In the last quarter, Lyft’s revenue grew by 41%, while Uber’s increased by only 16%, highlighting a significant difference in growth rates.

At TipRanks, Lyft is classified as a Hold based on five Buy ratings and 29 Hold ratings by Wall Street analysts. The average LYFT price target of $13.50 is a couple percentage points above the recent market price.

A Closer Look at DoorDash

I maintain a bullish outlook on DoorDash, the leader in the U.S. food delivery market with approximately 67% market share, much higher than competitors like Uber Eats and Grubhub. Over the past three years, DoorDash has achieved robust revenue growth with a CAGR of 32%. However, the company has yet to record a profitable quarter, which isn’t too surprising for a business focused on expansion.

In Q2, DoorDash achieved a record 635 million total orders, reflecting a 19% year-over-year increase. This drove revenue to $2.6 billion, 23% higher than for the corresponding period in 2023. For its bottom line, DoorDash reported a GAAP net loss of $158 million in Q2 2024; an improvement from a $172 million loss in the same period last year.

DoorDash’s growth potential hinges on international expansion, particularly following its merger with Wolt. However, its expense performance requires close monitoring, as cost of revenue rose 22% YoY in Q2, while SG&A expenses surged by 45% YoY largely due to legal costs.

Is DASH a Buy, Hold, or Sell?

I view DoorDash positively, bolstered by a remarkable 93% appreciation over the past year. Recent analyst activity further supports this optimism, with 22 out of 24 analysts raising their EPS projections in the last three months.

Currently, DoorDash trades at stretched multiples, with an EV/Sales ratio of 6.2x—higher than Uber’s and about six times that of Lyft. While some may see this as overvaluation, the company’s forward P/E ratio of 50x, combined with a forecasted EPS CAGR of 61% over the next three to five years, yields a PEG ratio of 0.8x.

At TipRanks, the consensus among analysts is a Moderate Buy, reflective of 22 Buy ratings and 10 Hold ratings from 32 Wall Street analysts. The average DASH price target of $149.18 is approximately where the stock was recently trading.

Conclusion

I’m bullish on both Uber and DoorDash for their growth and market dominance, but I view Uber as the superior choice. The ride-hailing giant demonstrates strong booking growth, a larger user base, and better profitability. While Uber’s high multiples appear justified when adjusted for growth—similar to for DoorDash—Lyft’s attractive valuations are overshadowed by uncertainties regarding its growth outlook and high short interest.

Disclosure