Despite a drivers strike, Uber seeks to woo investors ahead of IPO

The ride-hailing service plans to go public, following the lead of Lyft, which started trading on Nasdaq on March 29. The labor action—held today in major cities—is more bad news for Uber.

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Ahead of its IPO, Uber is trying to downplay the growing rift between the company’s leaders and its drivers—including today’s strike.

The stock issue promises big money for investors, but drivers who aren’t classified as employees are unlikely to see any reward. That, coupled with what some drivers describe as unfair and unsafe work conditions, has led many drivers to stand down for the day.

Organizers called for drivers and riders to turn off their apps and find alternative modes of transportation on May 8. The strike is occurring in major cities including London, New York, Chicago and Los Angeles.

The work stoppage comes at a crucial time for ride-hailing companies Uber and Lyft, both of which are trying to convince investors that they are worth billions of dollars in valuation. Lyft’s stock has fallen dramatically since its IPO in late March, leaving many to question Uber’s high value.

Both companies claim they treat workers well and tout big dollar figures when describing compensation for drivers, but the drivers say they aren’t getting a fair shake.

NPR reported:

When companies go public, it usually means big money for executives, and sometimes nice payouts for employees. San Francisco’s housing market has been bracing for the thousands of newly-minted millionaires spawned by four major IPOs this spring.

Uber’s valuation could be as high as $91 billion when trading begins, which would place it among the top three most valuable firms to ever debut on a U.S. exchange. Co-founder and former CEO Travis Kalanick’s stake may be worth as much as $5.9 billion.

But the IPO won’t be life-changing for most drivers, whom Uber insists are independent contractors, not employees. Some drivers will receive one-time bonuses according to their loyalty: Those who completed more than 2,500 trips before April 7 and at least one this year are eligible for a one-time bonus, ranging from $100 for those drivers with 2,500 completed trips to $40,000 for 40,000 completed trips. U.S. drivers can use that bonus to buy up to $10,000 in stock in the company at the IPO price.

Transportation officials have braced for the outage, with airport authorities issuing warnings to travelers and arranging for extra taxis.

The Washington Post reported:

In preparation for possible service disruptions, some airport authorities said Monday they were urging passengers to plan ahead to use public transportation where available. In the Washington area, officials said they were working with taxi dispatch teams at Reagan National and Dulles International airports to ensure that extra taxis were available in the event of increased demand Wednesday.

“We’ll have extra dispatchers available to help manage any increased crowds in the taxi lines on the curb and ensure that customers can get on their way as quickly and safely as possible,” said Christina Saull, a spokeswoman for the Metropolitan Washington Airports Authority. “At Reagan National, we always encourage passengers to consider using Metrorail as a good alternative to ground transportation — that advice would definitely apply to Wednesday as well.”

Uber attempted to dodge the issue, highlighting programs it has created to help workers.

The Washington Post continued:

An Uber spokeswoman declined to speculate on the possible effects of a strike, and Lyft did not respond to a request for comment Monday. In a statement, Uber said: “Drivers are at the heart of our service — we can’t succeed without them — and thousands of people come into work at Uber every day focused on how to make their experience better, on and off the road. Whether it’s more consistent earnings, stronger insurance protections or fully-funded four-year degrees for drivers or their families, we’ll continue working to improve the experience for and with drivers.”

However, drivers say the problem goes beyond compensation.

The Washington Post wrote:

Besides better wages, drivers are calling for a more transparent wage structure, attention to safety concerns and a right to appeal “unjust firings” with little to no notice. A Georgetown University study of 40 Washington Uber drivers found some thought the work “unsustainable,” with one-third reporting assaults or safety concerns and saying they went into debt to drive on the platform.

Uber has reported that its drivers have earned more than $78.2 billion on the platform since 2015, and $1.2 billion in tips. The company says that it offers financial rewards for qualifying drivers and that drivers can track their earnings in real time. On safety, Uber cites a number of features, including an emergency button, share trip feature and 911 integration technology in more than 40 cities.

Despite Uber’s claim that drivers are “at the heart” of its service, the company has publicly acknowledged that its relations with drivers will worsen as it phases out driver incentives.

Gizmodo reported:

A 2018 JP Morgan Chase study found drivers pay had fallen 53 percent since 2013. Uber said that is because of a rise in the number of part-time drivers.

The problem will almost certainly grow from here. In Uber’s S-1, the form the company filed with the SEC in order to go public, the company admitted “significant” driver dissatisfaction that will likely rise as take-home pay continues to decrease.

“In particular, as we aim to reduce Driver incentives to improve our financial performance, we expect Driver dissatisfaction will generally increase,” Uber explained.

“The first globally coordinated day of action against Uber is to send a loud and clear message that drivers have had enough,” Uber driver Rebecca Stack told Gizmodo. “Drivers across the globe have similar demands: to pay us a living wage, to have a voice at work, transparency around pay and policies that affect us, and recognition that drivers are the ones who built this company. We hope this global day of action compels Uber to pay their drivers a living wage and to build more equitable relationships with the people who are the heart of their company.”

Lyft is looking to the future as the company’s stock price hemorrhages and its first quarterly earnings report leaves much to be desired. Lyft drivers might soon have another type of competition: the robot driver.

Lyft and Waymo announced a partnership that would enable riders to hail a driverless taxi via Lyft’s platform.

The Verge reported:

Today’s announcement signals a willingness by Waymo to open up its cars to a wider selection of riders. It also represents the first time Waymo has made its vehicles available to people not involved in its early rider program.

“This first step in our partnership will allow us to introduce the Waymo Driver to Lyft users, enabling them to take what for many will be their first ride in a self-driving vehicle,” Waymo CEO John Krafcik said in a Medium post. “We’re committed to continuously improving our customer experience, and our partnership with Lyft will also give our teams the opportunity to collect valuable feedback.”

The news comes on the same day that Lyft announced its first quarterly earnings report as a public company. The ride-hail company said it lost a whopping $1.1 billion in the last quarter, compared to a $243 million loss over the same period in 2018. Lyft said its losses were compounded by costs associated with its IPO; its revenue was $776 million, nearly double the amount from last year.

As for the impact of the strike, experts don’t foresee major changes for investors or stockbrokers unless driver collectives can demonstrate real bargaining power.

CNN reported:

Arun Sundararajan, a professor at New York University’s Stern School of Business, told CNN Business that the strikes will be an interesting test of the strength of driver groups. “Are they actually representing the majority of the drivers?” he said. “As the freelance worker collectives evolve, they’ll need to come up with ways of inducing participation by offering compensation.”

Sundararajan said he doesn’t expect that the strike ahead of the IPO will diminish investor demand. Most investors, he suggests, are already aware of the ongoing issues between Uber and its drivers.

However the issue could worsen after Uber investors, and executives, convert their rich-on-paper status to rich-in-the-real-world when the company goes public. Workers will continue to face an uncertain future, while Wall Street is sure to closely scrutinize driver costs.

Many organizers are using social media to boost the message to boycott Uber and Lyft.

Others wanted to highlight how the companies had made improvements in American life:

What do you think of the strike organizers’ and companies’ messages, PR Daily readers?

(Image via)

COMMENT

One Response to “Despite a drivers strike, Uber seeks to woo investors ahead of IPO”

    Joshua David Olin says:

    Uber drivers are striking due to “lack of pay”. Don’t cross the picket line. Support the Uber workers by finding alternate ways of transportation. This will push down Ube’s income and stock. And will force a pay increase, if Uber wants to stay on top with the business they bring in.

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