Uber Technologies Inc. (UBER, Financial) drivers are constantly on the road, but the very real question facing investors is this: is the company actually going anywhere?
The signals appear mixed. Granted, the company’s numbers for 2021 are impressive: trips on its platform grew 23% year-over-year to 1.77 billion, with sequential growth in both Mobility and Delivery trips. Monthly Active Platform Consumers (MAPC) reached 118 million, up 27%.
In addition, drivers and couriers earned an aggregate $9.5 billion during the quarter, with earnings up 56% year-over-year, outpacing Uber’s gross bookings growth of 51%.
Management officially launched Uber One in the U.S. in November as a single cross-platform membership program. For $9.99 per month, members have access to discounts, special pricing, priority service and exclusive perks across rides, delivery and grocery.
For its first quarter of 2022, executives are forecasting gross bookings of $25 billion to $26 billion and adjusted Ebitda of $100 million to $130 million.
At the same time, however, Uber’s stock has seen a year-to-date drop of approximately 23%, lagging behind the S&P 500, which over the same time period has dipped just 6%. Uber’s decline has been “driven by headwinds in its ride-sharing business through the Covid-19 pandemic, concerns about inflation on the company’s costs, and a broader market rotation out of high-growth and loss-making companies, as the U.S. Federal reserve plans multiple interest rate hikes,” Nasdaq noted.
Loyalists will counter, pointing out that business was relatively unharmed during the Covid-19 pandemic, and that the company’s food delivery operation has seen strong growth - in fact, Uber is the strongest grower among competitors, although much of it was driven by the pandemic itself. And with travel returning, its freight and ride-hailing business should gain more momentum.
The ride-share company continues to move forward. Executives reported on Friday that Uber is testing a new driver-earnings algorithm in 24 cities across America that lets its drivers see both pay and destinations before accepting a trip. It also adds to their incentives to take shorter rides, which it is hoped will bring in additional drivers.
The test marks “the most wide-ranging updates to Uber's driver pay algorithm in years and come at a time when the company is still trying to win back drivers who left at the start of the pandemic. Fares paid by consumers are not affected,” Reuters reported. “Drivers have long demanded the ability to see the fare and destination before accepting a trip, but Uber has resisted, saying it could open the door to drivers cherry-picking trips or discriminating against riders in disadvantaged neighborhoods.”
"Gig work is very competitive, not just with Lyft (LYFT, Financial) but other platforms, and we think this feature really enhances our platform's competitiveness versus others," Dennis Cinelli, Uber's head of mobility in the United States and Canada, told Reuters.
Another positive sign is that a bill that would guarantee benefits for ride-hail drivers while still classifying them as gig workers has passed the Washington State House. It has been supported by both Uber and competitor Lyft, as well as the local Teamsters union, and is viewed as a workable compromise. If enacted, drivers would continue to be classified as gig workers yet be guaranteed benefits such as paid sick leave, a minimum pay rate and a resource center for drivers who want to appeal their deactivation.
LaborNotes, a non-profit organization and network for rank-and-file union members and grassroots labor activists, said that drivers are thus far uncertain of how beneficial such a law would be. In discussing the bill, Peter Kuel, president of the Teamsters-affiliated Drivers Union, told Bloomberg that "Thousands of Uber and Lyft drivers — predominantly immigrants and people of color — will benefit from this long overdue expansion of pay raises, benefits and protections statewide."
