In 2009, Uber upended the taxicab industry by providing something that, up until then, riders had never had before: an option. As an alternative to a taxi service, they seemed trendy with sleek vehicles, more affordable with less expensive fares, and more competitive, as users hoped it would help drive down fares and improve performance in the taxi business. In 2012, Lyft arrived as yet another alternative with even lower fares, this time marketing to both potential riders and drivers (at release, Uber had largely targeted current and previous cab drivers to man their vehicles) as a quirky service with a mustache that was available to everyone. Now in 2017, ridesharing has become so commonplace that it’s almost difficult to remember what it was like to live in a taxi-centric world. “Uber” and “Lyft” have become not just brands, but verbs, as in, “I’ll just Uber/Lyft to the event,” a coveted feat among marketers.
But, and forgive the pun, the ride has been a little bit bumpy. Between cutthroat competitive action among both brands, as well as dangers implicit in ridesharing, more scandals than not, and the concept of rideshares losing a little luster overall, the question remains: how are these services performing these days? Should you keep an eye on them, invest right away, or set your sights on a less uncertain industry? Here are some things you need to know before you make a decision on investing:
- First off, you can’t actually invest in either company yet. Well, not directly, anyhow. Lyft currently has no documented intention of running an IPO, however, there are several other brands who have invested in Lyft that you can buy shares in. General Motors (NYSE:GM) has had 9% stake in Lyft since early last year, a smart move on the motor giant’s part in case people give up driving altogether. Per The Motley Fool, every 11 shares of GM you purchase equals 1 share of Lyft that ends up being yours indirectly.Uber, of course, is valued at an astronomical amount ahead of its anticipated IPO (though a date has not yet been set, it is projected to take place next year.) Currently valued at roughly $68B (you read that right), the company has come a long way in its short lifespan, and the industry currently shows no signs of stopping, which could be very attractive to investors.
- Self-driving technology, at the moment, appears to be the inevitable future of traffic. Uber has maintained an edge in this area by building their own engineering team to develop their own unique technology for it, and they’ve made a lot of progress in little time. Almost a year ago, they put a self-driving semi-truck on the road successfully to make a quick beer run. Though there was a recent crash in Arizona with one of their self-driving vehicles, they bounced back quickly to get back on the road in San Francisco.On the other hand, they’ve got competition. Google’s Alphabet (NYSE:GOOG) is suing Uber for hiring one of their former engineers, claiming that the IP for their own self-driving technology went with him. Still unsettled, the lawsuit could either completely quash Uber’s progress and send them back to square one, or it could impede any further developments just long enough for Alphabet to get their tech out the door first.Lyft, on the other hand, is not even attempting to develop its own self-driving technology, and has instead opted to partner with other companies who can get that out the door on their behalf. Perhaps not unintentionally, Lyft has partnered with Alphabet on their technology in Waymo. While these partnerships are a boost, Lyft will also lose the opportunity to be the tech-makers in this field, and are beholden to how their partners proceed.
- Finally, there are the scandals, the vast majority of which have unfortunately centered around Uber: Drivers attacking passengers. Sexual harassment in the workplace. Competitive intimidation meant to drive other companies completely out of business. Driver turnover and satisfaction issues. Uber CEO Travis Kalanick stepping down. Threats to personal privacy. Serious criticism over the use of surge pricing in emergencies. The industry occasionally reads like a soap opera with a supervillain, leaving the company with fewer scandals to seem like a hero in comparison.
There is also reason to wonder about the future of ridesharing altogether: will it last? How long will it be before another option arrives to take its place? With tech advancing now exponentially faster than it ever has, we may not need to wait another 50+ years for these companies to be replaced…we may not even need to wait another 5 years for that to happen. It may be smart to keep your eye on both these companies, but remember that the true prize is in growth, and that growth will likely come in the form of technology.