Best Stock to Buy Right Now: Uber vs. Lyft?

When it comes to ride-sharing in the U.S., there are only two choices for consumers and investors: Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT).

The two companies have been rivals since their early days, and while Uber has long been the market leader, Lyft has been a steady innovator in the space and held its own despite predictions that it would fall by the wayside.

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Investors interested in the ride-sharing industry are likely to choose one or even both of these companies, as they're exposed to the same kind of opportunities. Taking a look at the two stocks side by side, let's determine which is the better buy today.

Image source: Getty Images.

Business model: Uber vs. Lyft

There are two primary differences between Uber and Lyft. The first is that Uber is a global company. It operates in over 70 countries worldwide, and the company aggressively expanded in its early years, seizing the opportunity to grab a first-mover advantage in the industry.

Uber has pulled back from some markets, as the company decided a few years ago that it would only compete in markets where it was No. 1 or No. 2 in ride-hailing. Scaling back its global ambitions has helped drive profitability at the company.

Lyft, on the other hand, only operates in the U.S. and Canada. A variety of reasons seem to have kept Lyft from expanding outside of North America, including a cash crunch, a difficult regulatory environment, and a strategic decision to do so. The company seemed to conclude that fighting for market share in now-established international markets was not worth the time or investment.

The other major difference is that Uber has a food delivery business, Uber Eats, while Lyft never expanded to food delivery, though it has partnered with DoorDash on some promotions. Lyft has said that food delivery is against its core mission of getting people where they want to go.

Both companies have micro-mobility businesses, including scooters and bikes, and have formed partnerships in autonomous vehicles. Uber has teamed up with Alphabet's Waymo, while Lyft recently formed a partnership with Mobileye, as well as May Mobility and Nexar.

Financials: Uber vs. Lyft

Due to its global presence, exposure to food delivery, and larger market share in the U.S., Uber is much bigger than Lyft.

In 2024, Uber reported revenue of $44 billion, up 18% from the year before, while gross bookings rose by the same percentage to $162.7 billion. Uber's profitability has also significantly improved in recent years, since it's pulled back from unprofitable markets and reached a détente with rivals like Lyft and DoorDash, as the company has scaled back on driver and rider incentives.

In 2024, free cash flow jumped 105% to $6.9 billion, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $6.5 billion.

At Lyft, revenue jumped 31% to $5.79 billion on 17% growth in bookings to $16.1 billion. Revenue growth outpaced gross bookings due to programs like price lock, growth in the advertising business, and improving driver and rider retention.

On the bottom line, the company finished with adjusted EBITDA of $382.4 million, up 72% from the year before, and free cash flow of $766.3 million, which compared to a loss in the quarter a year ago.

Valuation: Uber vs. Lyft

Valuing Uber on a generally accepted accounting principles (GAAP) basis is difficult because its net income is significantly impacted by equity investments. However, we can use the figures above to value it. On a free cash flow basis, it trades at a multiple of just 22, and its EV/EBITDA is 29, which seem like good valuations for an industry leader delivering the kind of growth that Uber is.

Lyft, on the other hand, trades at less than 7 times trailing free cash flow with an EV/EBITDA of 20. However, with a net income of $22 million and a GAAP operating loss, those figures may make the company look like a better value than it is.

Both Uber and Lyft have spent heavily on share-based compensation and continue to dilute existing shareholders.

Which stock is the better buy?

Both of these stocks have attractive qualities. Lyft has a history of innovating in ride-sharing, and new features like its Women+ option, which allows riders and drivers to be matched with other women, and price lock, which gives customers the option of locking in a regular ride at a set rate, are yielding positive results.

Meanwhile, Uber has done a good job of trimming the fat from its business, turning profitable, and delivering steady growth with the help of new products like Uber One, its all-encompassing membership program.

Overall, Uber seems like the better buy here, as it balances growth, profitability, and a reasonable valuation. Still, at the current price, Lyft isn't a bad choice for risk-tolerant investors, as it's delivering strong revenue growth and rolling out new product innovations. It has a lot of upside potential if it can execute on the opportunity in front of it.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends DoorDash and Uber Technologies. The Motley Fool has a disclosure policy.