Some Uber, Lyft Drivers To Get Stock in IPOs

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.

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:

[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.

Exploited

[110010001000]

Those darn companies keep exploiting these drivers and forcing them to work for them. Outrageous.

Re:

[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!"*

Re:

[110010001000]

How dare they give them $100! I'm outraged.

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 univers

Re:

[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 Ub

Re:

[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.

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:

[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:

[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.

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:

[Avidiax]

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

Re:

[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

Re:

[_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.

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

[davidwr]

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