In the U.S., Uber Technologies (UBER +0.84%) and DoorDash (DASH +2.62%) dominate the food delivery business. Of the two, DoorDash claims the most market share in online food delivery, placing it far ahead of Uber Eats and likely leading some investors to assume that it could be an obvious choice between the two.
Nonetheless, Uber earns the majority of its revenue from ridesharing, a business that offers market leadership in a valuable niche and more diversification than DoorDash. Thus, investors should take a closer look at both companies before determining which might be more likely to deliver higher returns for investors.
The case for Uber
As mentioned before, Uber is a more diversified transportation stock. Aside from online food delivery, it operates a lesser-mentioned but steady business that moves freight for its customers.
However, its greatest potential probably lies in its ridesharing business, which accounted for 57% of its revenue in 2024. Here, it is far ahead of its main rival, Lyft, claiming 76% of the market share versus 24% for Lyft, according to Bloomberg Second Measure.
Also, Uber may have a bright future in autonomous driving. It has partnered with Alphabet's Waymo and GM's Cruise to take ridesharing into the self-driving realm. If successful, this could redefine the value proposition of Uber stock, which has traded in a range since the beginning of 2024.
NYSE: UBER
Key Data Points
In 2024, the company's $44 billion in revenue grew by 18% yearly. A $5.8 billion income tax benefit skewed its net income. Still, with operating income rising from $1.1 billion in 2023 to $2.8 billion in 2024, its profits continue to grow. Moreover, a forward P/E ratio of 22 indicates the stock is still a bargain, which could make it a great time to buy Uber stock.
Why investors might consider DoorDash
For all of Uber's attributes, it faces a formidable competitor on the delivery side of the business in DoorDash. DoorDash claims 67% of the food delivery market, according to Bloomberg Second Measure. This is far ahead of its closest competitor, Uber Eats, which has 25% of this market.
This focus on delivery has helped DoorDash partner with numerous restaurants. DoorDash has also expanded into other verticals, allowing customers to receive delivered items from retailers.
Additionally, while DoorDash stock is flirting with correction territory, it is up by nearly 40% over the last year, significantly outperforming Uber.
NASDAQ: DASH
Key Data Points
DoorDash's stock price growth was likely helped by the company's 24% yearly increase in revenue, which reached $10.7 billion in 2024. Also, while it still ran a modest operating loss in 2024, $199 million in interest income turned it profitable on a yearly basis. That led to $123 million in net income in 2024, up from a $558 million loss in 2023.
That modest profit makes the company's P/E ratio unusable as a valuation measure. Still, when looking at its recent forward P/E ratio of 39, its rapid revenue growth and recent turn to profitability could persuade some investors to add shares of DoorDash stock.
Uber or DoorDash?
Given the state of each company, both are likely to outperform the market. Still, if you're looking for growth potential, Uber stock looks to have an edge, even with DoorDash's higher returns over the last year.
For one, its leadership in mobility positions the company well, particularly if it succeeds in the autonomous driving market. Moreover, even though DoorDash outperforms it in the delivery market, that business gives Uber some degree of diversification.
Furthermore, Uber's forward P/E ratio of 23 is well below DoorDash's forward multiple of 39, allowing investors to buy that stock at a lower valuation. That lower forward P/E ratio and the opportunity it holds in mobility should position Uber to deliver higher returns for investors.
