What do you call a ride-share company that can’t offer enough rides?
Overvalued, possibly. As ride volumes plummeted last year, ride-share drivers left Uber and Lyft in favor of other gigs such as the delivery of groceries and meals. But as vaccination rates climb, ride-share platforms are now paying up in hopes of welcoming back drivers in time to service an expected uptick in demand. They’d better hurry: The most recent ride-share volumes reported from Uber Technologies Inc. and Lyft suggest time is of the essence.
The tables have turned for ride-share companies who over the past few years have been fighting tooth and nail to keep driver costs from skyrocketing as legislation threats mount. Uber said last week it would invest in a one-time $250 million stimulus to incentivize drivers—new and old—to come to the platform. Meanwhile, Lyft is reportedly paying out $800 bonuses and other incentives to lure drivers. Both companies say their drivers are making significantly more now than they were pre-pandemic due to the short supply.
Investors are clearly anticipating a full rebound in ride-share demand post-pandemic. Shares of Lyft are up nearly 100% over the past year, while Uber’s shares have more than doubled. Last week’s news had little impact on those gains, indicating investors aren’t overly concerned about what could be a potential imbalance between passengers and drivers.
Perhaps they should be: Lyft said last month that the week ended Feb. 28 was its best in terms of ride-share ride volume in nearly a year. Uber on Monday said March was the best month for its mobility business since March of last year, noting consumer demand for its mobility business is recovering faster than driver availability. Having enough drivers to meet demand was the “one thing going into the second half of the year” that Uber’s chief executive officer, Dara Khosrowshahi, said he was worried about on his company’s fourth-quarter conference call.
