Will Uber and Lyft Continue to Be a Viable Mode of Transportation?
Rideshare services were an instant hit when they first launched. Booking through an app, getting picked up at your door and dropped off at your destination, for a reasonable price, was a very attractive proposition.
These services have now been around for more that a decade, with Uber and Lyft having the largest market share in the country, and also in most places around the world. But if you have booked an Uber or Lyft ride recently you might have noticed that prices are much higher than a decade ago. And that’s not only because of inflation or some newly added gas surcharges.
Rideshare prices have been going up for a while now. Data shows that prices were up as much as 92% between January 2018 and July 2021. That was in part because of a shortage of drivers who stopped working for these companies during the pandemic. Another survey shows an increase of 45% in the first quarter of 2022, compared with the same (pre-pandemic) period in 2019.
But will prices go back down once more drivers join these platform? Probably not. Uber has been burning through its investor’s cash throughout its existence. The company has lost more than $30 billion in just the last five years since its finances became public. Lyft and other ridesharing companies also follow a similar strategy, hoping to corner the market and then hopefully become profitable.
But so far, even these increasing fares that are becoming more unaffordable for the average American, are still heavily subsidized by investors.
Uber’s CEO Dara Khosrowshahi recently told employees in an email that the “the market is experiencing a seismic shift and we need to react accordingly”. To address this shift, Uber will slash spending on marketing, incentives and hiring. “We have to make sure our unit economics work before we go big,” Khosrowshahi wrote. The Uber boss said that Uber will treat hiring as a privilege and be deliberate about when and where to add more employees. “We will be even more hardcore about costs across the board,” he said.
Can Uber and Lyft ever be profitable and offer affordable prices for their ride-haling services? Maybe self-driving cars will make that possible? Who knows what the future holds! Let us know what you think!
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If you dig into the financials Uber is actually turning a profit last quarter
Uber once was 7 to 13 dollars one way for the 3 miles to my home from the airport
Now its 35 to 55 dollars so I hop a a taxi for 15 dollars plus tip
They are gouging and shooting at fish in a barrel and people many don’t compare prices
So I see their strategy as brilliant as they charge 3 to 4 x that of a taxi during peak times
and many pay for it as they just take what ever price is offered to them and click
Last week Lyft was 20 to Ubers 35 so I did use Lyft
My ORD to home cab was always $35+tip. For the first 5 years Uber was $20-$25. Now it’s either $25 or $75. I’ll take the $25 ride knowing no one is making money. But I’ll never take the $75 I’ll option. Ever. Charge a fair price or slightly surged and they’d do well
Thank goodness for the gift card at 10% Cashback.
Try the Curb app. Like Uber but no surge pricing. Far more drivers in big cities.
Ty for sharing! I was not aware of this app. I have downloaded it and intend to use it. I tend to shop lift and Uber whatever’s cheaper I will take. However there’s always a price point where I am not willing to budge on. And lately these two rideshare companies are terrible.
We used to use Uber all of the time. Inconsistent experience and unreliable. Drivers don’t know landmarks.
As a result, haven’t used it in a few years.
$16.00 Harry Reid to Bally’s 05.21.2022. 4 min wait. It’s the good old days again
Interesting. I know Uber stock is way down over the last year+. I hardly ever use it since I don’t work and also live in a place where it is rarely necessary. Following.
With rental car prices going even higher still seems like a good option and can’t see going back to taxis!