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Investing.com -- With Q4 2024 earnings reports for the gig economy approaching, analysts at Moffett Nathanson highlighted six key themes that investors will be watching closely.
1) In US rideshare, the industry saw a full recovery in the first quarter of 2024, but growth is expected to slow.
“1Q25E will mark the end of ‘easy’ comps and we expect industry trip growth to remain slightly above the 2019 exit rate of 9.4%. However, by the end of 2025E, we expect the growth rate for US trips to dip into single digits ending the year at 9.3%,” Moffett analysts led by Michael Morton said in a note.
Meanwhile, average prices remain significantly elevated—about 40% higher than 2019—raising questions about long-term growth sustainability.
2) Uber Eats is coming off a strong 2024, benefiting from Grubhub’s losses. However, Uber’s (NYSE:UBER) exclusivity with Domino’s is set to expire in Q1 2025, with Moffett analysts seeing DoorDash (NASDAQ:DASH) as a beneficiary of “adding the marquee restaurant to its long list of merchants.”
“Given this, we expect DoorDash to resume gaining market share in 2Q25E,” they added. “However, if we are wrong and Uber once again takes share from DoorDash in 2025, we will likely begin to ask if Uber One gives the company a path to long term share gains in US restaurant delivery.”
3) In grocery delivery, investors are watching whether DoorDash and Uber’s new grocer deals will erode Instacart’s competitive moat.
“The key risk for CART investors in 2025 will be the continued loss of exclusive marquee grocers, and there remain several that have not yet signed with DASH or UBER,” analysts noted. Retailers like Kroger (NYSE:KR), Publix, and Sam’s Club remain potential targets for these platforms.
4) Immigration policies could also impact the gig economy’s labor supply. Analysts said that the availability of delivery couriers in the US has likely been supported by more relaxed border policies under the Biden administration, especially in major urban areas. To address potential risks, Uber and DoorDash have strengthened identity verification measures.
However, the report cautions that tighter immigration laws could lead to higher expenses for recruiting and retaining drivers.
5) Meanwhile, Uber’s international mobility segment, a key driver of its earnings growth, has shown signs of deceleration.
“We were disappointed to see Uber’s International Mobility Gross Bookings constant currency y/y growth decelerate from 36.7% in 2Q24 to 30.0% in 3Q24,” analysts highlighted. They expect this slowdown to continue into early 2025 before a potential reacceleration later in the year.
6) Lastly, Moffett’s team touched on the subject of autonomous vehicles, which remains a wildcard for the gig economy.
While Waymo’s expansion is expected, uncertainty around Uber and Lyft’s role persists. Analysts said that Uber’s stock already reflects a worst-case scenario, with its August and December lows of around $60 per share “are pricing in the worst-case scenario for autonomous vehicles.”
“We continue to see Uber as an attractive investment despite the risk of negative headlines,” they added.
Analysts believe that while AV technology could disrupt the rideshare model, demand aggregation platforms like Uber and Lyft (NASDAQ:LYFT) may ultimately be best positioned to integrate these services.
“Consumers, not AV operators, will decide what they want, and it’s demand aggregation, not five applications to find a ride.” The long-term impact on profitability remains uncertain, but the firm sees a potential path for Uber and Lyft to maintain sustainable take rates as AV adoption scales.