Uber IPO: Will uber drivers benefit from tech company's first public offer?

• With Uber's high-profile IPO threatening qualified drivers, it stands to get a corporation.
• 5.4 million shares, or 3 percent of the total offer, will be reserved for US drivers.
• Still, the relationship between the running company and its drivers is controversial, and a strike is scheduled for May 8.

The top executives, directors, and early investors of Uber Technologies stand to reap billions of dollars out of their efforts in the equestrian when it goes public later this week. Ousted founder and former CEO Travis Kalanick, who still owns 8.6 percent of Uber, is expected to make nearly $ 9 billion on his efforts, while early investor Jeff Bezos of Amazon.com ̵[ads1]1; the world's richest man – stands for Making $ 400 million of their investment.

Qualified Uber Drivers – the company's lifeblood – will not look anywhere near the same types of returns, although some will have the opportunity to buy Uber shares as they begin trading between an expected $ 44 and $ 50 piece this week.

Here's how IPO math works for drivers: About a quarter or 1.1 million of Uber's 3.9 million drivers around the world have completed at least 2,500 trips before April 7, including at least one in 2019, and is in good standing with the company, will be eligible for a one-time "charm rating reward." The bonuses, based on a driver's number of completed rides, range from $ 100 for drivers who have completed 2,500 trips to $ 40,000 for drivers who have completed 40,000 trips.

US-based drivers will have the opportunity to use these bonuses to buy up to $ 10,000 in stock in the company, a Uber spokesman told CBS MoneyWatch. The riding company has set aside 5.4 million shares – or 3 per cent – of its regular stock for drivers. All shares not purchased by drivers will be offered to the public, Uber said in a SEC filing last month.

Uber has long had a controversial relationship with its drivers, who are classified as independent contractors instead of employees. Some drivers plan to strike on Wednesday morning's rush hour to protest what they say are long hours and low pay. Uber, Lift and other shipping companies that are members of New York's Taxi Workers Alliance claim that Ubers leaders and insiders become rich in driver's hard work while struggling to make ends meet.

"When you compare early investors and leaders and what to do, it clearly stands in contrast to the drivers, even though they are the hearts and lungs of the Uber economy," Wedbush observed stock analyst Daniel Ives.

Average hourly wage of $ 9.21 after driver charges

Uber drivers make money on a double per mile and per minute formula, while Uber collects service and order fees that vary by geography each time a trip is taken. A study by the Economic Policy Institute, looking for learning, estimates that uber drivers earn equivalent to $ 9.21 in hourly wages after taking into account Uber's fees plus automobile vehicles and other expenses.

Other studies estimate that they earn more. Gridwise, a software company that helps drivers maximize their revenue across ride search apps, estimates that the Uber drivers earn $ 18.65 per hour before spending. For example, in Chicago, where a driver's average reported hourly earnings are $ 18.82, average hourly earnings are $ 15.03, according to Gridwise.

Among the driver's requirements is that Uber retains a smaller percentage of each ticket. The mediation rate in 2018 was 21 percent, varying from 12 percent to 24 percent, depending on geographic area, according to the company's SEC filing, and is expected to rise to 22.3 percent later in 2019, according to Wedbush's Ives.

And Uber still loses money: In the decade since its inception, no profit has yet been made – and can never make money. In 2018, the company lost more than $ 3 billion, losing an average of 58 cents per trip last year.

"Wall Street investors tell Uber and Lyft to cut down on revenue from the driver, stop incentives, and go faster to the driver without a car," said New York Taxi Workers Alliance, director Bhairavi Desai in a press release. Uber and Lyft wrote in their S-1 archives that they think they are paying for the drivers too much already. With IPO, Uber's business owners are set to make billions, while drivers are left in poverty and go bankrupt. "

Uber says the driver's status as independent contractors gives them the flexibility they would not otherwise have – a perk whose value is not lost on drivers. In the back, they have to give their own vehicles and are responsible for associated costs, including gas, car insurance and miscellaneous expenses.

The company also recognizes in its IPO filing that its "business will be adversely affected if drivers were classified as employees instead of independent contractors."

The Disappointing Lift Experience [19659012] While uber drivers will have the opportunity – in IPO time – to own part of the company they are working for, there is no guarantee that it will be a good investment.Uber competitor Lyft, who debuted on Nasdaq in March, has seen its shares dropped more than 30 percent since IPO.

"The same thing was done for the Lift IPO, and it wasn't much of a benefit [for drivers] because the stock traded below the IPO price," said Kathleen Smith, manager and head of IPO E TFs at Renaissance Capital, a provider of institutional research and listed listed funds.

"It's a creative move from Uber and Lyft – and we've seen it before – but sometimes it doesn't seem as planned, and if employees don't get what they expect. If things don't go well, they could be unhappy, she said.

Smith also expects many drivers to keep their cash rewards and not to stock them. "For me, the profile of a Uber driver is not someone who takes stock and keeps it, the profile we see is someone who takes money and spend it on expenses, "she said.

Anyway, Uber must find a common ground with its drivers if it hopes to scale the company to meet the estimated $ 80 billion in market value as Someone on Wall Street gives it. Uber would do well to reward their drivers who could ditch the platform entirely for rivals such as Lyft or Juno, if the working conditions become too unfavorable.

"There are some benefits to employee loyalty but when They get a bonus like this, it can work the opposite way, if the stock goes down, it can cause grousing among drivers, "Smith said.

It is clear that the IPO will produce some great winners, and the sub program is an attempt by Uber to congratulate the drivers.

"[The stock options] talking to the balance that Uber is going to have over the next few years, says Ives." Drivers are the fuel in the engine, and they must be cautious about [company] taking prices and profitability on the ride because it is a certain line in the sand where drivers can go or go to work for another competitor. Uber needs, from a PR perspective, to handle this so drivers feel they are part of this company and they get IPO shares talking to it. "