The bulls have been largely driven out of Lyft (NASDAQ:LYFT) and Uber (NYSE:UBER). The ride-hailing duopoly has been a one-two sucker punch, with Lyft and Uber falling precipitously since hitting the market earlier this year at $72 and $45, respectively. No one said that investing in IPOs would be easy.

Oddly enough, the bears are also moving on. There were just 15.8 million shares of Lyft sold short at the beginning of this month, the lowest count of financially vested naysayers since mid-April. Lyft and Uber may seem to be boring and broken IPOs, but there are a few good reasons to expect better things in the year ahead. Let's go over why both stocks can rev up come 2020.

Three well-dressed passengers and a Lyft driver in an imaginary car with a Lyft beacon on the dash.

Image source: Lyft.

1. Business is booming

Personal mobility is here to stay. Lyft and Uber are posting double-digit revenue gains, growing at the expense of old-school ways of getting around and even vehicle ownership trends. The financial reports they put out earlier this month are far more exciting than their stock charts.

Revenue at Uber rose 30% to $3.8 billion in the third quarter, more than doubling the 14% year-over-year top-line increase that rattled investors three months earlier. Growth has been decelerating at Lyft, but it's hard to stay mad at a company that just clocked in with a 63% surge in quarterly revenue. Lyft's growth is a combination of a 28% increase in active riders and a 27% boost to its revenue per active rider. In short, we're leaning on the only two car services that matter more and more with every passing quarter. 

Lyft is growing briskly as a pure play on North American personal mobility. Uber is the much larger player with a strong international presence. Uber also has operations in restaurant delivery and freight that are growing even faster than its flagship service. 

2. Bottom-line improvements will come

The biggest knock on Uber and Lyft is that they're losing a lot of money. The operating and net loss widened for both companies in their latest earnings reports, and the red ink isn't going away anytime soon. However, there are still some encouraging signs out there.

Lyft revealed earlier this month that it expects to be profitable on an adjusted EBITDA basis by the fourth quarter of 2021, well ahead of when most analysts figured that would happen. Uber's personal mobility business has increased its segment adjusted EBITDA to the point where it can cover its platform R&D and corporate G&A costs. 

3. Starting lines matter in any race

Uber and Lyft are broken IPOs, trading 38% and 39% below their underwriter pricing, respectively. Put another way -- and here is where the math is cool -- Uber would have to move 61% higher in the coming year (and Lyft up a whopping 64%) just to get back to what the market thought these two companies were worth during their springtime IPOs. 

Bears will argue that Uber and Lyft won't recover. Their stick shifts will be stuck in reverse forever. However, let's jump a year from now. What if Uber and Lyft are still posting healthy top-line growth with engagement continuing to improve? What if the take rates keep tilting in their favor in these scalable businesses? What if Uber Eats joins Uber in generating positive adjusted EBITDA? Won't we be just a year away from Lyft turning profitable on an adjusted EBITDA basis? If at least one of these questions is answered in the affirmative, it's easy to see how the stocks will at least be trading higher than they are right now. If the answers are all positive, it would be a shock if the stocks aren't at least back to where they were at the time of their early 2019 IPOs.

The rearview mirror isn't pretty when it comes to Uber and Lyft, but look ahead. The road isn't as winding as you might think, and the windshield isn't cracked.