Lyft shares fell as much as 4.2 percent on Monday (May 6) after reports came of a drivers’ strike, planned for this week. The planned rideshare strike is set to take place in New York City on Wednesday (May 8), and similar action could reportedly take place in other U.S. cities, too.
The issue is regarding the pay for Lyft and Uber ridesharing drivers, along with demands for better job security. However, the strike is happening as Lyft is set to report its quarterly results on Tuesday (May 7), while Uber is expected to price its initial public offering (IPO) later this week.
“To me, the planned driver strike is not a new occurrence, as there appears to be somewhat of a groundswell of push back occurring as ride-hailing goes from private hands to public ownership,” said Northcoast Research Analyst John Healy in an email interview, according to Bloomberg. “The driver strike does not specifically create new regulatory items, but clearly pushes the concerns into the forefront.”
In addition, analysts warned that a strike would put a spotlight on the regulatory risks associated with how ridesharing drivers are treated by companies like Lyft and Uber, as well as differentiate the two major plays in the ridesharing market.
“I think this particular protest could be a temporary overhang for the shares, but, stepping back, Lyft and Uber’s relationships with their drivers, more broadly, is a critical issue for both companies,” said D.A. Davidson & Co. Analyst Thomas White via email. “Having a sufficient number of drivers on the platform at any one time is essential for maintaining adequate liquidity in Lyft and Uber’s marketplaces, because it is a key element of providing a good customer experience for riders.”
“At the moment, in North America, Lyft’s brand is associated with being more socially responsible and treating their partners relatively better than, [say, Uber],” White added. “Whether Lyft can differentiate its brand in this way versus Uber over the long term will be interesting to watch.
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