DA Davidson analyst Tom White reiterated the Uber Technologies, Inc (NYSE:UBER) stock with a Buy rating and a $62 price target.

The analyst re-rated after comparing quoted trip prices and wait times for UBER vs. its primary U.S. Rideshare competitor, Lyft, Inc (NASDAQ: LYFT). 

UBER's quoted rideshare prices are ~3% lower than LYFT's exiting July - based on his weighted average analysis for trips in the top 20 largest U.S. cities. This data somewhat contradicts the prevailing market narrative related to LYFT's recent pricing changes. 

Specifically, his checks last week showed that quoted rideshare prices on the Uber app in the top 20 largest U.S. cities were 3.3% cheaper (on a weighted average basis) than prices quoted on the Lyft app for the same trips/destinations. 

His checks represent Rideshare pricing for one rider at a given time. They acknowledge that UBER and LYFT are constantly changing/tweaking/optimizing their pricing to achieve specific market-specific business objectives. 

White's comparison of trip quotes on the Uber and Lyft apps in the top 20 U.S. cities show that LYFT's wait times are 31% longer on average (again using a weighted average, based on city population) than the wait times quoted on the Uber app for the same trips (this equates to 2.33 additional minutes). 

Shorter wait times are a natural byproduct of UBER's scale advantage and generally a more liquid marketplace. Of the 20 cities he checked, LYFT's quoted wait time was longer in 18, with UBER longer in two. 

On LYFT's 1Q'23 earnings conference call, new CEO David Risher indicated that LYFT had started investing in lower Rider pricing and improved service levels/Driver earnings. 

LYFT first reduced its base pricing in January but made more substantive reductions in early March. Since then, he has been monitoring whether LYFT's more competitive pricing has resulted in any meaningful change to LYFT's growth trajectory. 

In addition to his pricing/wait time comparison analysis, this note also looks at trends in mobile app engagement and download activity for both LYFT and UBER. 

White had seen some conflicting data points on whether LYFT's pricing actions over the last several months resulted in any meaningful erosion of UBER's category share in the U.S. On the one hand, a recent WSJ article profiling new LYFT CEO David Risher cites data from third-party data firm YipitData suggesting that LYFT's U.S. category share increased 200 bps during 2Q to 30%, with UBER's share declining 200 bps to 70%. 

On the other hand, mobile app engagement and download data from Sensor Tower suggest there has been little-to-no real change in the market share/competitive landscape since LYFT implemented its pricing changes earlier this year.

Price Action: UBER shares traded higher by 1.71% at $48.97 on the last check Monday.

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