Some Uber, Lyft Drivers To Get Stock in IPOs (wsj.com)

Ride-hailing companies Uber and Lyft are planning to give some drivers money to buy stock in their initial public offerings, WSJ reported Thursday [The link may be paywalled; alternative source]. From a report: Both Uber and Lyft's IPOs will include programs that would give some of their most-active or longest-serving drivers a cash award with an option to put it toward stock in the IPOs, according to people familiar with the matter. It is typically hard for an ordinary investor to buy a company's stock at its IPO price before it begins trading on an exchange, so this move would give drivers access they likely wouldn't have had otherwise.

Uber is working out the details of a program expected to be valued in the hundreds of millions of dollars that would give a significant portion of its 3 million active drivers and couriers globally either a cash bonus or the option to use that cash to purchase shares at the IPO price, people familiar with the matter said. These awards will be tiered based on a sliding scale related to the driver's length of service and number of trips or deliveries, these people said.

Comments

Don't Miss Out

[Anonymous Coward]

Funnel your paycheck into our ponzi scheme today!

Last I checked Uber's model was trading investor cash for market share and had arrived at diminishing returns. Sounds like the perfect time to let the public buy in.

Re:Don't Miss Out

[nazsco]

This is actually a great way to accomplish several things:

- workforce happy with the idea that the will be able to "flip" said stock

- the company can "feel" the market by looking at how the informal pre-sale of the options are happening.

- generate buzz in the media for the IPO price.

It's genius.

Re: Don't Miss Out

[Type44Q]

Last I checked Uber's model was trading investor cash for market share

Not really; they're trading current profits for self-driving/self-flying R&D/IP but they're doing so in an overly-agressive and panicky fashion (hence their losses) because they know their current business model, although currently lucrative as fuck, is on borrowed time.

Re:Exploited

[TFlan91]

*Reads news article detailing how increasing productivity might result in a bonus*

*Increases productivity*

*waits*

*waits*

*waits* ....

*waits*

*get's an extra $100 in the mail with a sticker that says "Good Job!"*

Is this usual for customers?

[mcmonkey]

I've heard of employees and even preferred business partners getting options toward an IPO, but Uber dirvers aren't employees. They're more like customers--drivers who use the Uber service to find riders.

Or so Uber has always insisted.

Re:Is this usual for customers?

[Nkwe]

Exactly. In the debate about drivers being employees vs. contractors or some other non-employee legal status that these companies want to think they are (in order to get out of paying benefits and other requirements that are involved with having employees), it would seem that offering access to the IPO would be an argument that they are in fact employees.

Re:Is this usual for customers?

[phantomfive]

There is a legal definition of employee, and it's the only thing that matters. It doesn't matter if "logically, they would be an employee" or "by any reason of common sense they are an employee" or even "you'd have to be daft to think they aren't employees!"

The only thing that matters at all is whether they are legally employees or not.

Wouldn't own either stock

[Anonymous Coward]

Take the cash drivers and invest in stocks that have a real future to grow.

Not exactly

[rsilvergun]

the entire economic systems does it. Here's how it works: You work hard, get a good job, but you don't have a college degree. You move up in your company, but then the layoffs come. Outsourcing, automation, H1-B replacement. You're out. Now you're starting over. HR filters mean you can't get an equivalent job because your lack of a college degree means you don't even get a human being to look at your resume. You could lie and say you have a degree, but you'll fail the background checks (that are now universal and cheap).

But you've got this car from when you had a good job. A few years old, 30,40k miles. You gotta pay rent/mortgage. So you join the gig economy. You know you're on borrowed time. You're making less than it takes to keep a roof over your head and that car running. You're taking a payday loan where the interest is the mileage on your car... Sooner or later it's going all collapse unless you get lucky and get a real job. And even if you do you'll spend those earnings digging out of the hole you were in while unemployed. So you'll never get ahead. Meanwhile inflation in necessities (food, shelter, healthcare, education, etc) is 4.5% but your raises are 1.5%....

. This is modern day slavery. You're overtly never forced, but the alternatives are abject poverty and homelessness. Starvation if you take if far enough. Unemployment without the gig economy is pushing 10%, but if you ask anyone we're at "full" employment.

One of the things that hurt the Southern United States was they had billions, maybe Trillions of dollars tied up in slaves. Meanwhile the north had employees. The employees were disposable. You didn't care what happened to them. Sure they were "free", but if they tried to unionize they got their heads busted in just like a runaway slave. On a long term scale the freemen in the North were better off because eventually Unions formed and got better wages, but it took decades. And the wealthy have noticed this. They don't like paying for your quality of life.

Take the money and run

[rsilvergun]

as somebody who watched dozens of low tier employees have their AOL stock outright stolen during the Time/Warner merger just take the money and run. If you try to wait they'll just find a way to snatch it from you if it ever becomes valuable.

I knew folks who were planing to buy houses with their stock options before the company just said "We're taking them back and there's nothing you can do about it. Go ahead an sue us, you'll run out of money or die before it hits the Supreme Court".

Re:Take the money and run

[Avidiax]

What was the method used to steal these employee's stock? Is there a news article about it?

Re:Take the money and run

[david_thornley]

rsilvergun was talking about how employees' AOL stock became worthless with the Time-Warner merger. I don't know the details, but there can be problem with keeping equity during a merger. You could probably find something about it, if it went that way, but the lesson is that you need to be careful about stocks sometimes. In a company that might get into a merger, it may be best to not buy the stock, or sell it immediately on receiving it. Prices tend to go up from the IPO, so it might be wise to wait a few days.

Re:Take the money and run

[_merlin]

Simple: multiple share classes. The VCs have a different class of shares to the employees, so in the event of a buy-out or merger they're compensated first, and whatever's left over (if anything) goes to the employee shareholders. I've seen this happen first-hand, but I was lucky enough to not have actually exercised my options. I felt sorry for the employees who'd literally bought in and lost it all.

Re:Exploited

[juniorkindergarten]

No, there's a sucker born every minute.
Uber pumps them up with hopes of making lots of money, while lying about it the whole time. Eventually people figure out its a scam and find a real job that's not part of the "gig economy" When the gov says it costs $0.58 mile to maintain your car and uber is paying only $0.60 mile - drivers eventually figure it out. Uber's happy with drivers that last for 3-4 months.
Uber's stated goal is to have driverless cars, everyone who is driving for them now is helping Uber get closer to that goal. Working to put yourself out of a job for a few dollars.

Remember, if your IPO pops, you are doing it wrong

[davidwr]

If your IP "pops" then it was under-priced.

Re: Exploited

[thunderclees]

Also, "Never wizen up a chump" The median pre-tax hourly income for Uber drivers is just $3.37. not including car and related expenses. Forget it if your insurance company finds out.