Blog Article | Rohit Kulkarni
Posted: April 13, 2017

Ride-Sharing & Drivers: The Love-Hate Story Continues

Last week, in our SharesPost Expert Series webinar, renowned ride-sharing expert Harry Campbell, founder of the popular blog, The RideShareGuy (RSG), did a deep dive into the ongoing tug of war between drivers and ride-sharing companies. Affable and irreverent, Harry has a unique perspective on the ride-sharing industry, particularly from a driver’s point of view. He has personally interviewed and conducted surveys of thousands of drivers over the past several years.

In a wide-ranging conversation with Harry, we covered a number of topics we discuss regularly with institutional investors about the long-term prospects of Uber and Lyft. For those who missed the webinar, we wanted to recap some of the highlights. The entire webinar replay is available online to SharesPost members. Click here to sign in or register.

Over 1 million drivers on Uber and Lyft in the U.S. Harry estimates roughly 750,000 to 1 million drivers currently drive for Uber in the U.S. More than 200,000 drivers are on the Lyft network. According to the surveys conducted by RSG, about 2 out of 3 rideshare drivers actively use more than one rideshare service. Harry mentioned that it is not uncommon for drivers to sometimes run multiple rideshare service apps at the same time to maximize earnings. However, roughly 75% of the drivers surveyed by RSG primarily work for Uber and about 20% primarily work for Lyft.

Hourly earnings have declined, but gross earnings remain strong. Harry noted that over half of all drivers earn between $10 - $20 per hour. Uber drivers report earning on average $15.68 per hour before expenses, while Lyft drivers report $17.50 per hour before expenses. These figures are largely consistent with our UberX driver experience, as highlighted in our deep-dive report, “Uber & Ride-Sharing: $650 billion question”. However, Harry said that hourly earnings vary significantly in large metro areas such as San Francisco or Los Angeles, where a seasoned driver can earn an incremental $10-20 per hour. He illustrated this point with an interesting graphic showing that driver pay has seen a continual decline over the past few years. At the same time, drivers are also racking more miles to earn comparable earnings. However, a full-time driver in a city like San Francisco can earn up to $2,000 per week (before expenses), indicating a fairly robust consumer demand environment for ridesharing services.

Subsidies & incentives offset price cuts & carpool products: While hourly earnings have declined over the past couple of years, company subsidies and incentives haven’t declined, and they continue to help with driver earnings. Lyft provides additional income opportunities, such as in-app tipping option and Power Driver Bonus. Uber offers weekly trip incentives through Earnings Boosts, which increase take-home pay for drivers who work in certain places and during certain times. Harry estimates up to 50% of drivers churn from the networks after their initial 6-12 month “honeymoon period.”

Expect Uber and Lyft’s battle for drivers to continue: According to surveys conducted by RSG, 75% of Lyft drivers are either “very satisfied” or “somewhat satisfied.” However, only 50% of Uber drivers indicated comparable levels of satisfaction. In addition, current or past Uber drivers continue to pose as an attractive pool of potential drivers for Lyft. Mr. Campbell noted that both Uber and Lyft continue to be fairly aggressive in acquiring and retaining drivers as overall consumer offerings continue to converge. All in, Harry argued that satisfied and productive drivers are an important factor contributing toward the long-term economic success of ridesharing companies. After several years of experimentation, Uber and Lyft seem to have realized this too!

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Information regarding companies in the SharesPost 100 List available on the website has been collected from or generated from publicly available sources. The availability of company information does not indicate that such company has endorsed, supports or otherwise participates with SharesPost. Company “thesis” are the opinions of SharesPost and are not recommendations to buy, sell or hold any security of such company.

Rohit Kulkarni
Article Author

Rohit Kulkarni

Rohit is the Managing Director, Private Investment Research for SharesPost Financial Corp. Prior to joining SharesPost, Rohit was a Vice President, Senior Analyst at RBC Capital Markets.

PLEASE READ THESE IMPORTANT LEGAL NOTICES AND DISCLOSURES

This blog post is being published by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management, LLC., an investment adviser registered with the Securities and Exchange Commission, are wholly owned subsidiaries of SharesPost, Inc. SP Investments Management, LLC is the investment manager of the SharesPost 100 Fund, a Registered Investment Company, and other funds. These entities and funds (hereafter “SharesPost”) does, seeks to do business with and owns the companies covered in this research report. Consequently, investors should be aware that SharesPost has a conflict of interest that could affect the objectivity of this report.

None of the information contained in this blog post represents an offer to buy or sell or a solicitation of an offer to buy or sell any security and no buy or sell recommendation should be implied, nor does it constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation, do not (1) advise any member on the merits or advisability of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax or transactional advisory services.

Information regarding companies in the SharesPost 100 List available on the website has been collected from or generated from publicly available sources. The availability of company information does not indicate that such company has endorsed, supports or otherwise participates with SharesPost. Company “thesis” are the opinions of SharesPost and are not recommendations to buy, sell or hold any security of such company.

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