Lifts debuted in the public market at $ 87.24 per share, an increase of 21 percent from the $ 72 offer price among significant demand from potential shareholders. It is the first riding company to go public, with a market value of $ 30 billion. Meanwhile, the drivers – the people who run this app-based service – were on strike.
The riding business celebrated the milestone in Los Angeles, and not on the New York Stock Exchange, a more typical place for the high profile coming out parties. LA is one of Lyft's largest markets, and the city has accepted the company's announcement of fewer personally owned cars and several shared trips.
But while Lyft celebrated, hundreds of Uber and Lift drivers were in violation of protests against low wages and unsatisfactory working conditions across the city. Drivers also went to San Francisco and San Diego, hoping to use the moment to move the spotlight away from Lyft's IPO (and Uber's upcoming public offering as well) to the more pressing concern about the future of riding. [1
"I equate it to a traditional employee who is called into the office every 60 days and is told," Hey your wages are cut, click here or you're fired, "" Jeff Perry, a lift driver for almost three years, Bloomberg .
Uber and Lyft have built platforms that use millions of drivers and delivery workers, but none of the companies consider these employees full-time or even part-time employees. One is they classified as independent contractors, free to set their own schedules and run for any app they want. As entrepreneurs, the basic benefits of employee compensation, health insurance and paid time are lacking. Nor can they collectively negotiate for higher wages or better working conditions.
Lifting, in its recent submission for an initial public offering, told potential investors that they were forced to classify drivers as employees "might require us to substantially change our existing business model" and warned of potential "monetary exposure." While Uber's prospect has not yet been released, it will likely contain similar languages.
Fortunately for both companies, the courts have largely agreed that drivers do not count as employees. Drivers have seen few victories in their legal battles against their classification as entrepreneurs. And the US Supreme Court recently issued a ruling that strengthens employers 'power to force workers to use individual arbitration rather than complaint, further reducing drivers' ability to challenge their status.
Before the IPO introduced Lift a number Programs aimed at appeasing drivers: No-fee bank accounts, an extended rental car program, and discounts on vehicle maintenance and repairs. Uber has also tried to rework himself as friendly to drivers, highlighting product updates such as tipping apps, a redesigned driver app, and a high performance rewards program. There seems to be a nervousness that the driver problem, as it were, could provide a shadow over their public debut.
Uber and Lyft both plan to give some of their drivers cash bonuses, which are meant to allow drivers to buy stock. It is a complex solution to a problem facing the drivers, who cannot stock up with their drivers because of the SEC rules that prevent private company shares from being freelancers.
"Hopefully this will be moved by Lyft put some more income into the pockets of the participants in the Consolidated Directive, but I do not expect that it will be a large dollar amount in many cases," said Micah Rowland, COO at the Concert Group and hires the platform fountain. Concerned about this move may even receive again if the stock price takes a leap or if the drivers end up paying the tax bills they cannot afford to pay.
It would be a mistake to assume that each driver will be classified as one full-time employee, Lyft's senior manager Jon McNeill told me in an interview last week, "The vast majority of our drivers are part-time," he said. "You know the statistics just emphasize that they are making money in different ways. Many of them have full-time jobs. And this is a supplement. Some combine many part-time jobs because they want the flexibility to set their own schedule. An employment classification would obviously discourage it because it would not allow them that flexibility. "
The question of whether drivers would act as flexibility for employer-insured health insurance or employees, depending on which drivers you are talking to. Logging 10 or more hours a day, running for app-based companies, will likely take reclassification over flexibility. The scale runs on weekends to make the end meet? Probably not.
In New York City, drivers are on the edge after a lift driver died with suicide this weekend, the ninth driver in town to take his own life since the end of 2017. The driver's death came after Lyft sued the city over the implementation of rules that set a higher floor for hourly pay at the race. Lifts claimed that the law would give Uber an unfair advantage because it is bigger and has several awards. the company's bid for a temporary ban.
Investors do not seem to be concerned about the upheaval among drivers, perhaps because they assume such workers will soon become obsolete. Both Uber and Lyft work on self-propelled technology, with the ultimate goal of replacing their human-powered vehicles with automated. Per mile costs plummet, passenger requirements spikes, and ri-hag companies harvest the rewards.
But there are obvious problems with self-driving technology, not least that it is still years, if not decades, away. Legislators are increasingly taking a skeptical view of autonomous vehicles, after several high-profile crashes. If the technology and regulatory issues can all be resolved, fleets of robot disks, with associated operating costs, must still be financed – and it is unclear what these costs would be.
Lifting reports lose $ 911 million last year and warn it can never be profitable. "We have a history of net loss and we cannot be able to achieve or maintain profitability in the future," the company said by filing with the Securities and Exchange Commission. Uber is likely to say something similar in his filing; The company loses about $ 800 million in the quarter.
Runaway companies are on the verge of a major crash due to these losses, according to Hubert Horan, a consultant with 40 years of experience in the management and regulation of transport companies, who wrote a 17th survey of Uber's financial situation for Naked Capitalism . Horan claims that Uber uses "produced narratives and propaganda techniques that hid (or diverted attention from) evidence of the lack of competitive economy and its terrible financial results." If both companies end up raising the money they are hoping for, this problem is "just shifting from the current investors to the new public shareholders."
Drivers will also be on the hook for these rising losses. The only advantage Uber and Lyft can have is the car's lack of financial hope – that they do not understand the full cost of using their cars, thus giving the shipping companies a bargain. There is some evidence to support that perception. Horseback riding recently released the results of the first study, which showed that UberX drivers earn less than $ 10 per hour. They would do better at McDonald's.
Horan argues that Uber and Lyft must slash costs even more than they have ($ 3 billion and $ 1 billion, respectively) to appease the shareholders. "Even when they become public, they will undoubtedly do everything to further reduce wages," Horan said in an email. "And also increase prices and reduce service."
Analysts note that ri-hailing has a low barrier to entry, which means that it is very easy for new businesses to enter the market with their own products and prices that are cheaper than those established. Lyft says it has a 39 percent market share, but it's not a guarantee.
"Uber and Lyft cannot produce taxi service as cheap as a typical Yellow Cab company," Horan continued. "The idea that one day they will have costs low enough to compete with transit and private car is a delusion."