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Uber’s market share in the US ride-hailing market is declining, as its own growth slows and rival Lyft’s bookings and ridership increase rapidly, PYMNTS.com reports.
If this trend continues, it could threaten Uber’s ability to raise more capital from investors, serving a major blow to the company at a time when it’s burning through cash to attract more riders and drivers.
Uber’s US market share fell from 84% at the beginning of this year to 77% at the end of May, according to research firm Second Measure, which analyzes anonymized credit card data.
The company’s overall growth has been slowing — its revenue grew 18% sequentially in Q1 2017, compared with 74% sequential growth in Q4 2016. Meanwhile, its gross bookings increased 9% sequentially in Q1, compared with 28% in the final quarter of last year.
Lyft has experienced explosive growth amid Uber’s string of scandals. The company’s bookings were up 135% year-over-year (YoY) this past April, according to PYMNTS.com. Additionally, its total passengers in February 2017 numbered 4.8 million, more than twice its total passengers in February 2016.
These numbers indicate Lyft has been successful in its bid to expand aggressively while Uber has been mired in controversy. The startup raised new funding in recent months, which it has used to attract riders and drivers in new markets. In addition, Lyft launched new premium car services to compete directly with Uber’s high-end UberBLACK and UberSUV services.
If Uber’s growth continues to slow while Lyft’s accelerates, it could damage the company’s ability to raise capital in the future. As platforms that connect riders with drivers, it’s critical for both Uber and Lyft to keep expanding their user bases to make their offerings more valuable and attractive. But the cash that Uber has been shelling out to lure in new riders and drivers is leading to steep losses — the company registered a net loss of more than $2.8 billion in 2016 — keeping it heavily reliant on relationships with investors.
Meanwhile, Uber saw a pair of important executives leave the company in recent weeks, while CEO Travis Kalanick is now taking a leave of absence. If Uber’s growth continues to slow on top of this, investors may question the company’s ability to fend off growing competition, causing them to balk.
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