Uber and Lyft are playing with fire every day, but nobody knows it besides the drivers and woke rideshare employees who are self-aware of the problem. The race to the bottom continues.

In what was one of the most exciting runner-ups to an IPO (IPO meaning the “initial public offering” of its very first sale of stock to the public, also known as “going public”) in recent memory, Uber opened to an average $45 per share and finished opening day down 7.7 percent to $41.52 per share. Similarly, Lyft hasn’t fared much better at all. The younger sibling to Uber is way down on its opening stock price and is currently being sued by some of its investors.

Rideshare is a tricky game. I can attest to knowing a thing or two because I am a driver myself. I can tell you one thing — we’ve been squeezed in every which way from both platforms, but it’s understandable. At some point, this IPO was going to come for both; a critical mass of drivers joining the network was going to be achieved and they were going to need to start moving towards turning a profit. We’re now at that moment. However, driverless cars are the endgame for these companies (we all know it), but from surveying a lot of my riders, they wouldn’t feel comfortable riding in one (even with an operator) for at least 3-5 years. Uber and Lyft can’t maintain a relationship with its drivers in this current state for another few years and somehow remain viable. A third party would enter the market at that point to attract away the drivers through better incentives and higher lucrative pay rates.

Additionally, analysts and reporters aren’t going to be very nice about any of this either. Aaron Gordon, Senior Reporter of Investigations and Technology at Jalopnik, is reaching out to drivers nationally in an attempt to gather data on the new “flat surge” that Uber instituted. From there, he will analyze it against the rates charged to passengers to get a better understanding of take-home pay and price-fixing potential. From personal experience, this is likely not going to end in a very favorable outcome for Uber based on data Gordon plans to collect.

Even in its current state, Lyft has been seeing pretty negative analysis from the news agency Seeking Alpha, which features extensive amounts of data analysis, research and news for investors.

In an article on April 30, Lyft is Transforming Shareholders Into Bag Holders by Penn Little, it was found that “Lyft’s unsustainable revenue model is the equivalent of selling 50-cent hamburgers for a dime and a facade is not a strategy,” and that “Lyft is losing market share back to Uber due to disastrous driver pay policies implemented in Q2 2019 to boost Revenue Percentage per Booking (RPB).” The article even notes that the New York City TLC’s Utilization Rate formula could be the proverbial writing on the wall for Lyft, not to mention that their stock “should be trading closer to the industry price-to-sales ratios around $19-per share.”

Nonetheless, it all pales in comparison to the recent statements released from the National Labor Relations Board in an advisory memo which “concludes that Uber drivers are independent contractors and not employees — a classification that means they have no right to form a union or bargain collectively,” the memo continued, “Driver groups across the country, inspired by gains in New York and California, have shifted their focus from pursuing change at the federal level to the state and city level.

In California, state legislators are trying to codify a 2018 state Supreme Court decision on the matter, in New York a minimum wage just above $17 per hour was instituted and a halt on new drivers was placed, Chicago saw this as attractive and is looking to follow suit. At the state and city levels, you can expect to see more lobbying from drivers across the nation for worker protections.

The cherry on top? Driver churn. With churn rates (drivers quitting) around roughly six months, PYMTS found that “as the companies get bigger, the high churn could become a bigger problem. While both companies listed recruiting drivers as a risk factor in their IPO prospectus, they didn’t lay out the churn rate.”

This is a perfect storm brewing for both companies. The next 3-6 months will tell us a lot about what the future holds for not only these two, but for the rideshare industry as a whole.

Will driverless cars be adopted at a much quicker rate by the public? Will the discrepancies exposed publicly of the pay rates to drivers versus the rider payments sink the stocks? Will driver churn become an increasing problem? So many questions to come in this race to the bottom.

To be honest, I thought we’d have flying cars by now. The Jetsons lied to us.

Written ByThe M.A.N

Mmmm. No Comments today, please.