Sunday, February 25, 2024
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Valentine’s Day Strike: What to Know as Uber, Lyft Drivers Prep to Stop Rides Feb. 14

Source: Daniel Dror / Shutterstock.com

Wall Street is abuzz over the upcoming Uber (NYSE:UBER) Strike this Valentine’s Day, Feb. 14. Indeed, Both Uber and Lyft (NASDAQ:LYFT) drivers plan to cease driving in major U.S. and Canadian cities this Wednesday in protest of declining pay, driver safety and more, according to Business Insider.

Twenty cities will experience the ride-share strike, including San Francisco, Chicago, Boston and Toronto. The strike is planned as an all-day affair on historically one of the busiest days for the industry.

Rideshare Drivers United, an independent association of U.S. rideshare drivers, is preparing for a gathering outside Uber’s Greenlight Hub in Washington, D.C. The organization plans to bring to light the recent fall in driving fares that have hurt the bottom line of rideshare drivers.

Drivers primarily attribute the launch of “upfront fares” and a bloated supply of drivers as the primary cause of the deteriorating pay.

Upfront fares refer to a program launched in 2022 that lets drivers see how much they will make for a given drive and how long it is. While the practice may seem beneficial at first blush, it actually allows Uber to disregard things like timing and location, resulting in lower takeaways for drivers, especially during previous “surge” hours.

Reddit user u/KenClash29 posted on the r/uberdrivers forum last year pointing out the negative effect the program has had on drivers:

“With upfront pricing rate and time charges go out the window, no longer is the value of the ride determined by these things, instead it determined by an ALGORITHM, yes that correct. Fares are no longer based in reality but what Ubers Algorithm deems it is worth, or how low they can go before a driver accepts.”

Uber Strike Weighs on Uber, Lyft Stock

Both Uber and Lyft are in the red at the time of writing, down 2.8% and 4.5%, respectively, as investors await the carnage of this week’s Valentine’s Day strike.

The two companies have made recent concessions as a means of appeasing drivers. For example, starting today, Lyft will pay drivers for time spent waiting for a rider and allow more choice in choosing which rides to accept. Likewise, Uber announced in its Q4 earnings call it will roll out more than 20 improvements to the Uber Driver app to enhance driver safety, as well as offer more incentives.

While UBER stock is up 18% this year, while Lyft is down almost 10% over the same period.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

With degrees in economics and journalism, Shrey Dua leverages his ample experience in media and reporting to contribute well-informed articles covering everything from financial regulation and the electric vehicle industry to the housing market and monetary policy. Shrey’s articles have featured in the likes of Morning Brew, Real Clear Markets, the Downline Podcast, and more.

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