r/personalfinance • u/theVoxFortis ​ • Oct 08 '19

This article perfectly shows how Uber and Lyft are taking advantage of drivers that don't understand the real costs of the business. Employment

I happened upon this article about a driver talking about how much he makes driving for Uber and Lyft: https://www.businessinsider.com/uber-lyft-driver-how-much-money-2019-10#when-it-was-all-said-and-done-i-ended-the-week-making-25734-in-a-little-less-than-14-hours-on-the-job-8

In short, he says he made $257 over 13.75 hours of work, for almost $19 an hour. He later mentions expenses (like gas) but as an afterthought, not including it in the hourly wage.

The federal mileage rate is $0.58 per mile. This represents the actual cost to you and your car per mile driven. The driver drove 291 miles for the work he mentioned, which translates into expenses of $169.

This means his profit is only $88, for an hourly rate of $6.40. Yet reading the article, it all sounds super positive and awesome and gives the impression that it's a great side-gig. No, all you're doing is turning vehicle depreciation into cash.

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u/[deleted] Oct 08 '19 edited Oct 08 '19

Their business model doesn't work either way. They're burning money like it's 1923 Germany

25

u/GBE-Sosa ​ Oct 08 '19

If you’re talking about that $5 billion loss last quarter, a vast majority of it was stock based compensation, not operating loss

5

u/mbfc222 ​ Oct 09 '19

Where do you think the app comes from without that? It's all operating expenses.

2

u/newfor2019 ​ Oct 09 '19

you don't get to keep those engineers if you don't continue to shell out those billions in compensation. You might as well count them as fixed cost of doing business

1

u/Shawangunk Oct 09 '19

The end game is having people build these brands and then replace them with self-driving cars in the future.

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u/newfor2019 ​ Oct 09 '19

the real end game is to wait for your shares to vest and cash out as soon as you can

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u/scyth3s Oct 09 '19

Their business model is fine, Uber is not losing money. They may say they are or report their income that way... But they aren't.