The battle for ridesharing supremacy of the early 2020s between Uber and Lyft may, in some ways, faintly resemble the “cola wars” of the early 1920s between Coca-Cola and Pepsi-Cola.

Coke preceded Pepsi and got off to a massive head start in the soda space, as it took Pepsi-Cola until 1910 to sell 100,000 gallons per year, while Coca-Cola hit 1 million gallons sold six years prior. But Pepsi powered through two bankruptcies in 1923 and 1931 and has been the world’s largest beverage company for five straight years, according to Food Engineering.

To make a long story short, it’s not always which company starts in the lead, which gives Lyft hope, despite being over three years younger with less market share and name recognition.

Uber is the world’s largest ride-hailing company with a $46.8 billion market capitalization that calls itself a technology company. The name “Uber” has become a verb as well as a noun as it’s entered the English lexicon as a synonym for getting a ride.

The San Francisco-based company operates in 63 countries with a massive network and the opportunity to reach 4.3 billion people through ridesharing, food delivery, electric scooters and even a freight shipping platform. In the U.S., Uber’s market share is around 69%, while Lyft is gaining steam but still much smaller at 30%, according to Second Measure.

Meanwhile, Lyft is roughly a quarter of Uber’s size at a market cap of $9.3 billion. It’s “laser-focused,” in the words of management, on building a scaled ride-sharing network exclusively in the U.S. and Canada. While Lyft also has electric scooters, it’s otherwise solely focused on providing rides in North America.

Lyft isn’t trying to revolutionize shipping like Uber, nor is it bleeding money in the highly unprofitable food delivery space. Uber Eats, a leading meal delivery service that competes with DoorDash, Grubhub and Postmates, generated $734 million in revenue in Q4 but still lost $461 million, according to its latest quarterly report.

But, there are many positive takeaways for Uber’s food delivery service. Uber Eats is the third-largest meal delivery service, according to Second Measure, and it’s quickly gaining market share in a steadily growing space. Clearly, Uber Eats has the potential to be a huge cash cow for Uber, and Lyft can’t and won’t ever match it in food delivery.

A quick look at Uber and Lyft’s financial statements reveals that the two are rapidly growing in an industry that’s almost certainly here to stay, but, as of now, each is highly unprofitable, and that won’t change overnight. Both companies are focused on expansion and gaining market share, not profits like more-established firms. That means revenue is reinvested to improve scale and grow further, which is acceptable for growth-focused companies.

However, it’s looking like Uber will reach that target sooner rather than later, at least on an EBITDA (earnings before interest, taxes, depreciation and amortization) basis. In late 2019, both Uber and Lyft said they were aiming to become profitable by the end of 2021, but on Feb. 6, Uber moved that timeline up by a year, and that news sent its stock price soaring by 10% after hours. That timeline is now seriously in doubt given the nationwide COVID-19 breakout.

Prospective investors can conduct careful research to see how these competitors fare now, though it’s unclear which one will win the ridesharing wars. Even if neither becomes a dominant global force, Uber or Lyft — or both — may be worth a roll of the dice for investors with a long time horizon willing to take a risk.

Essentially, it depends on which company’s business model one believes in and which vision one sees coming to fruition. After all, despite both providing rides, the companies have vastly different goals and strategies.

Lyft has a strong and trusted — albeit less known — brand, as it’s generally avoided negative press that’s plagued Uber when it comes to rider safety and workplace culture. Additionally, Lyft is making a big bet on autonomous vehicles. It’s partnering with Ford to create and dispatch self-driving cars during high-traffic times, which, if successful, may reduce the costs of paying human drivers. Its management sees its long-term competition as car ownership — not Uber. There may be a future out there where commuters in cities rely solely on Lyft instead of owning a car and dealing with car payments, insurance, gas, parking and maintenance expenses.

Meanwhile, Uber wants to take over the world — literally. Not only does it have a firm hold over the U.S. market, but it operates on six continents in the ridesharing space and is diversified. If the food delivery space matures and rationalizes, meaning discounts and incentives decrease to sustainable levels, Uber has the resources to ensure Uber Eats is a dominant player. Additionally, Uber Freight could improve efficiency and logistics between shippers and carriers and revolutionize that industry.

However, Lyft’s steady growth in the U.S. market and focus make it a better bet, assuming one were to invest in one of the two today. Lyft is focused on a simple mission with a clear identity and a solid brand, while Uber may be spread too thin across several complex industries across the world.

Both have fallen drastically from their short-lived highs in 2019, as Lyft is down around $30 from a peak of $88.60 on its debut day late last March, while Uber is trading in the high-$20s after hitting a high of $47.08 in June 2019.

It’s clear that neither company is perfect. Revisit the Madison Business Review next Monday to read why the ridesharing industry faces numerous legal, legislative and technical challenges of its own before investors can bet on it and sleep soundly at night.

For risk-averse investors, Uber and Lyft may be stay-away stocks until the losses stop and profitability is reached. But, those with a high risk tolerance willing to take a chance on ride-hailing companies with seemingly bright futures may want to hop in before Uber and Lyft pull away.

*By James Faris via The Breeze*