Uber Is the Rideshare Name to Own Even as Lyft, Tesla Turn Heads With Leaps
The battle for the growing rideshare market is heating up but there's reason to doubt Uber's competition.
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On Monday, Uber UBER closed at an all-time high. Uber beat earnings estimates by a wide margin, although the San Francisco-based rideshare leader came up just shy of revenue estimates.
Uber shares received a lift from rideshare competitor Lyft LYFT, which also soundly beat earnings expectations. Lyft also increased its share buyback plan, sending the stock soaring.
Both stocks have been solid performers of late. Shares of Lyft have now gained 56% over the past month, while Uber shares have climbed 38% year to date.
Rising Tide
Why are both rideshare names doing well right now? As the old saying goes, a rising tide lifts all boats.
News of progress in the trade talks between the U.S. and China has caused the S&P 500 to gap to its highest level in two months. The closely watched large-cap index is also trading above its 200-day moving average (red) for the first time since March 26.
There is significant growth potential ahead for the rideshare market. According to Global Market Insights, over the next 10 years, the projected compound annual growth rate for the U.S. rideshare industry is 6.9%.
Uber gained 6.4% on Monday to close at an all-time high of $88.14. Since the April 7 open (point A), Uber shares have climbed by nearly 41%.
Meanwhile, shares of Lyft still have significant resistance ahead in the $19 area (point A). Deutsche Bank recently raised its target price for the stock to $16 from $14, while maintaining a hold rating on the stock.
Tesla Joins the Chase
Meanwhile, Tesla’s Robotaxi is entering the fray. The Austin, Texas-based EV and robotics company has reportedly launched a fledgling rideshare service to a limited number of its employees.
On Tesla CEO Elon Musk’s social media platform, X, the Tesla AI account posted the following on April 23:
“FSD Supervised ride-hailing service is live for an early set of employees in Austin & San Francisco Bay Area."
The post declared that over 1,500 trips, totaling more than 15,000 miles of driving, had been completed thus far. A video showed riders using an app to request a pickup, and then using a video screen in the back seat to issue additional instructions.
The key phrase here is “FSD Supervised.” At times, the video shows an individual in the drivers’ seat, monitoring the vehicle’s activity. A fully autonomous rideshare service from Tesla may be further in the future.
Bottom Line
Uber is the name to own in the rideshare space. Lyft’s recent rally may be due in part to short covering, and Tesla has much work to do before it becomes a contender. Meanwhile, Uber maintains a huge lead, controlling a 75% share of the U.S. rideshare market.
At the time of publication, Ponsi was long UBER.
