DRIVEN BY PANDEMIC, THE GIG ECONOMY DIPPED AGAIN IN FALL; HOW BAD WAS IT?
Investors looking for signs as ride-hailing companies announce financial results
In a year turned upside down by the pandemic, Roberto Moreno’s experience as a ride-hailing driver in San Diego reflected the fortunes of the companies for which he drove.
In March, more worried about getting sick than losing money, he stopped picking up passengers. In June, as the pandemic receded in California, he went back on the road. But as the coronavirus case numbers started climbing again, he shut it down once more.
This week, Lyft and Uber, the biggest ride-hailing companies, are announcing their financial results for last year, and they are expected to look a lot like the roller coaster experienced by Moreno.
Investors are also expected to be keenly focused on signs of improvement this year, and whether Uber and Lyft — which held two of the highest-profile initial public offerings in recent years — will be an indicator for the rest of the travel industry. And they’re looking to Airbnb, which is expected to report its earnings in the coming weeks, for hints at consumer
spending patterns.
“Ride sharing is in the eye of the storm,” said Daniel Ives, managing director of equity research at Wedbush Securities. “Even though it’s been better than expected, you still have travel down 50 to 60 percent
with constant lockdowns across cities and states.”
The companies declined to comment on the business impact of the pandemic. Investors and analysts believe the companies are poised for
recovery once a vaccine becomes widely available.
For the year, Lyft reported that its loss narrowed to $1.75 billion, or $5.61 per share. Revenue was reported as $2.36 billion.
Uber’s earnings will be released today.
Uber’s rides, the core of its business, were down 80 percent in April, and about 53 percent in the third quarter of 2020, the most recent period for which it has released data.
To stem its losses, Uber doubled down on its food delivery service, Uber Eats, and acquired a competing service, Postmates. In the third quarter of last year, Uber said its revenue from the food delivery business grew 125 percent. Last week, Uber also acquired Drizly, an alcohol delivery service, for $1.1 billion.
Uber also cut costs by dropping its money-losing businesses like its self-driving car unit, which aimed to develop fully autonomous vehicles but burned at least $400 million a year. Analysts now expect Uber’s fourth-quarter revenue will be down about 12 percent from the year before.
Lyft, which had avoided expansion into food delivery, did not have a big delivery business to fall back on, though it said it would test a small program, transporting some “essential” products like medical supplies and groceries. Lyft recently said rides were down 75 percent in April from the year before and about 50 percent in November.
Gridwise, an earnings tracker service for gig workers, said driver earnings fell about 10 percent in November, a double dip that was reminiscent of the 24 percent drop in earnings drivers saw in March, before recovering around the Christmas holiday. And drivers are spending more time sitting in their cars, waiting for the next ride, while riders cut back on tips, Gridwise said.
But a spokesman for Lyft said that in several of the company’s Top 10 markets, driver earnings have gone up. Because there are
fewer drivers on the road during the pandemic, “those that are still driving are receiving a larger portion of the rides available and so are earning more while they’re driving,” said Eric Smith, the Lyft spokesman.
Some drivers said they were being more selective about which rides they accepted, targeting high-value rides and declining short trips. Sometimes, that means looking for riders who were leaving illegal gatherings.
“I seek out what I would consider superspreader events,” said Ben Valdez, an Uber driver in Los Angeles. “A house party in the Hollywood
Hills or remote areas of L.A. — we actively look for these because we can count on people paying top dollar to get out of there.”
Valdez built a plastic partition in his car to separate the front and back seats. Despite the risk, Valdez said that driving is worthwhile if he is able to secure valuable rides. “I have a choice of living off my credit cards or going out there and risking myself for the money,” he said.
Although Uber and Lyft provide some cleaning products and masks to drivers, Valdez, who spends $40 to $60 a week on masks and sanitizing supplies, and other
drivers who spoke to The New York Times said they don’t receive enough supplies and have to supplement what they get from Uber and Lyft with their own purchases.
Uber said it distributed more than 21 million masks and sanitizers to over 1 million drivers and couriers in the United States and Canada and banned 3,726 riders for “repeated violations” of its policy that requires passengers to wear masks. Lyft said it provided more than half a million face masks, cleaning supplies and incar partitions to drivers.
Many gig workers have migrated to delivery services like DoorDash
and Instacart, viewing them as safer options than carrying passengers in their vehicles. Moreno, who runs a WhatsApp group for Spanishspeaking drivers in the San Diego area, said many of the drivers in his group switched to food delivery as a safer choice.
“You have more of a safety net from a delivery standpoint. Do you opt into more safety but less earnings, or do you take more risk and make more money because of that?” said Ryan Green, the chief executive of Gridwise. “It’s a tough choice that drivers have to make.”