Uber and Lyft have had to compete on pricing -- lowering ride prices for the rider, or reducing the take-rate to keep drivers happy -- but that may end soon. Drivers will likely leave one for the other, if it means keeping a higher portion of each ride. Riders may use both apps, if it means finding a better bargain on one. With seemingly no ability for Uber and Lyft to differentiate the riding experience, it seems hard to believe the two could compete with each other on brand strength.
Maybe they can, WedBush Securities analyst Dan Ives wrote in a post-earnings Lyft note out to clients May 8.
"We believe Lyft did a commendable job addressing a hot button issue for the Street as the company sees an environment of significantly reduced discounting and rider incentives going forward as management sees the U.S. market as mature enough, with two clear leaders in the space, where competition on pricing has receded and does not play as meaningful a role in market share gains," Ives said. "Lyft is now focused on driving growth through an improved driver and rider experience and ecosystem rather than on pricing/incentives."
Ives noted that Lyft is developing a platform that allows riders and drivers to be matched based on location, which increases ride efficiency and keeps riders loyal to Lyft. To keep drivers loyal, Lyft may offer cash accounts to drivers, allowing them to easily access their ride earnings.
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