Wells Fargo names ride-share company Uber (UBER) a top mobility stock for 2024 after seeing massive gains in 2023.
Wells Fargo Senior Analyst Ken Gawrelski comments on Uber's growth outlook moving into 2024 and its dominant market share over competitor Lyft (LYFT).
"We're roughly [at] 70/30 market share, a couple points here or there. Uber with the leadership share, Lyft at the number two spot," Gawrelski tells Yahoo Finance. "I would call this a pretty rational duopoly, and certainly they fiercely compete for riders and drivers."
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
MYLES UDLAND: And Ken, thinking about Uber and Lyft, and we'll keep it just to the US ride sharing market, I'm curious what the state of that story is. Obviously both companies now have other components to their business, but you mentioned the 2019 IPO. What got us there was that market, you know, coming into existence, 14, 15, 16.
What's the state of play today in the US ride sharing market between those two companies?
KEN GAWRELSKI: So we're roughly 70/30 market share, a couple of points here or there. Uber with the leadership share. Lyft at the number two spot. I would call this a pretty rational duopoly, and if they are-- certainly they fiercely compete for riders and for drivers, but this, you know, this is evolving to a more rational duopoly.
We have a new management team, a new executive team at Lyft. I think these companies are less share focused and more focused on generating value for all stakeholders that includes drivers, riders and shareholders. And I think-- so I think we are kind of in that next step of evolution into a duopoly market domestically.
And we've seen healthy supply-- healthy supply of drivers, which helps the marketplace. We've also seen healthy demand and we think that continues into '24.
SEANA SMITH: So Ken, here we are today, like you said, 70/30, that new leadership at Lyft. Their ability-- I guess, how confident are you that they are going to be able to chip away some of that market share from Uber and what does that timeline look like?
KEN GAWRELSKI: Sure. It's a great question. So I think the new management team, they've stressed that they're going to do it via product innovation and not via pricing. So if you look in the past, there's been-- Lyft management-- prior Lyft management had taken some pricing initiatives, and they subsequently lost share, right?
And so what I think, you know, we'll start to see is more product differentiation. There's a product at Lyft called wait, and save which is-- appeals to more value conscious customer. Uber tends to skew a little bit higher on the demographic scale so-- but we see, overall, pretty healthy competition.
I think at the margin, we'll see a couple points a share trade hands, but overall, we see a pretty rational environment here.
