Taxi Drivers Wait in the Wings if Uber/Lyft Fail

In this week’s roundup, senior RSG contributor John Ince covers an interesting development in Uber borrowing, plus how taxi drivers have modernized to handle excess demand from riders and more below.

Uber Borrowing $500 Million in Junk’s Refinancing Frenzy []

Sum and Substance:  Uber Technologies Inc. is borrowing $500 million to refinance debt, joining a barrage of high-yield companies that are capitalizing on cheap rates to lower their interest expense….

The ride-sharing service is selling bonds due in 2028 to redeem an equal amount of 7.5% notes due in 2023, according to a statement Monday. It will also use cash on hand for the redemption.

The new bonds may yield around 6.5%, according to people familiar with the matter. Morgan Stanley, which is lead manager on the bond sale, has indicated to investors the size of the offering is unlikely to grow, one of the people said, asking not to be identified as the details are private. …

My Take:  This isn’t necessarily a sign of distress, but it is unusual for a tech company to be borrowing money.  Probably just a sign of how low interest rates are.

How Uber and Airbnb Created a Parasite Economy [Marker.Medium]

Sum and Substance: Uber and Lyft’s high-profile battle with California over its AB5 law, which requires them to classify their drivers as employees, has driven the debate over gig workers and their platforms to a fever pitch. Marker sought out the perspective of Juliet B. Schor, a professor of sociology at Boston College and author of After the Gig: How the Sharing Economy Got Hijacked and How to Win It Back, to shine some light on how these companies really treat their workers, and how these platforms might be fixed.

Schor and her team collected data on 13 different gig work platforms including Airbnb, TaskRabbit, Postmates, Uber, and Lyft over seven years, and interviewed 278 different gig workers about their experiences working on these platforms in the process of writing the book. We spoke with Schor to discuss whether these platforms expand opportunities for workers or exploit them, and if the gig economy can disrupt the discriminatory barriers of the traditional employment economy….

My Take:  This is an illuminating interview. They look broadly at Uber, Lyft, AirBnB and many others and basically learn that drivers and others have a tough time on the platform.  The virus hasn’t made things better.  Still too many drivers and the level of business has dropped off too.  No answers here – just a little more light on the problems.

The Emperor Has No Clothes – Uber’s Business Model Is Broken [SeekingAlpha]

Sum and Substance: With the stock trading well below its IPO price, some investors may think there is value in Uber. Think again. We think those with fiduciary responsibilities need to consider just how much risk they take by owning UBER at current levels.

The stock is priced as if Uber will improve profitability and take 101% of the ridesharing and food delivery markets.

We first warned investors about Uber’s (NYSE:UBER) unrealistic valuation before its IPO in April 2019: “Uber’s IPO Valuation Makes No Sense.” After an underwhelming IPO and its firsts earnings report as a public company, we warned again in “Uber Gives Investors the Worst of Both Worlds.”

My Take:  This a great summation of what Uber is up against.  It goes into great detail about how Uber has been losing money pricing the product below cost, meanwhile failing to provide basic necessities for drivers.  Driverless cars are way off in the future. Well worth a read.

Drivers Union Delivers Petition From Over 1,600 Uber/Lyft Drivers Supporting Fair Pay [PR Newswire]

Sum and Substance: Today, Uber and Lyft drivers with the Drivers Union delivered a petition signed by over 1,600 drivers calling for fair pay.

The petition, which was delivered at a Seattle City Council hearing on Mayor Durkan’s “Fare Share” Plan, urged councilmembers to build on the Mayor’s plan with provisions to ensure greater transparency for riders and a living wage for drivers. …

Uber and Lyft have sought to avoid pay regulation, most recently by financing a competing study which has been widely criticized in the academic community for methodological flaws and bias.

Drivers Union, affiliated with Teamsters Local Union 117, is an association of thousands of Uber and Lyft drivers in Seattle standing up for fairness in the for-hire transportation industry.

My Take:  In Seattle, drivers are showing some might.  Not unionized yet, but 1600 drivers is nothing to sneeze at.  It’s a beginning …

Taxi drivers: We’re ready to step in if Uber and Lyft bail [SFChronicle]

Sum and Substance: Taxicabs, like other forms of transportation, have seen ridership plummet during the pandemic. But the industry has scrambled to eke out extra business — and drivers are eager to let the public know that they are ready to take up the slack if Uber and Lyft pause California operations.

“We’ve been forgotten in the collective memory of the public,” said Chris Sweis, CEO of Yellow Cab, San Francisco’s largest taxi fleet. Before the pandemic, it ran about 500 cars a day; now about 165 are on the road. “The taxi fleet in San Francisco has been underutilized. We’ve now modernized operations to handle any excess demand that comes in.”…

“Flywheel is ready and prepared to service all current Uber and Lyft passengers,” said Hansu Kim, owner of Flywheel Taxi, the city’s second-largest fleet with 300 cabs pre-pandemic and about 70 now.

There’s a particular irony to the situation. Taxi drivers blame Uber and Lyft for their steep decline in business over the past decade, saying that the ride-hailing companies got unfair advantages by being more lightly regulated. Uber and Lyft retort that taxi companies grew complacent with city-sanctioned monopolies, and failed to evolve with the times.

My Take:  A sweet irony it is – taxis waiting for Uber and Lyft to falter or even pull out of California.  That will all come down to Prop 22 and how it does in November.

Read more about Proposition 22 and how it could affect drivers nationwide.

Readers, what do you think of this week’s roundup?

-John @ RSG