Uber Technologies Inc. announced Wednesday it will spend $250 million on bonuses to lure drivers back to the platform as it gears up for increased ride-hailing demand.
Uber had recently indicated it expected to spend money on luring drivers back once COVID-19 restrictions loosened, and drivers say they’re already seeing bonuses. But shares of Uber UBER, -2.00% fell 2% to $56.89.
“In 2020, many drivers stopped driving because they couldn’t count on getting enough trips to make it worth their time,” the company said in a blog post. “In 2021, there are more riders requesting trips than there are drivers available to give them— making it a great time to be a driver.” Uber noted that it was a limited-time offer, and that it expects driver earnings to return to pre-COVID levels once more drivers return to the platform.
Nicole Moore, a Lyft driver and organizer with Los Angeles-based Rideshare Drivers United, said drivers have been seeing the bonuses, which Uber in its announcement referred to as a “stimulus.”
“It’s funny that they’re calling it a stimulus,” she said. “They’re trying to tap into ‘we’re trying to stimulate the economy, like we’re the government.’ We know what this is: It’s a bonus to get people on the road.”
Moore added that drivers she knows are not “taking crappy rides” because they don’t want to risk contracting COVID-19 for little compensation.
KeyBanc Capital Market analysts said in a note this week they have seen “anecdotal evidence indicating that driver supply remains insufficient in key tourist locations.”
Ed Yruma, managing director at KeyBanc, told MarketWatch that “both Uber and Lyft have been aggressive in trying to get drivers back” through incentives like bonuses when they hit certain rides or income thresholds.
He added that although the lack of driver supply is a negative for both companies, he expects it to be temporary: “The key takeaway is demand is strong. It’s easier to fix supply issues than demand.”‘
Uber Chief Executive Dara Khosrowshahi said at a tech, media and telecom conference at the beginning of March that “the workday non-commute part of our business is nearly fully recovered.” He also said then that the company would be shifting incentives from attracting riders to drivers to make sure it was prepared for the rebound in rides demand.
The company saw its rides or mobility business recover to declines of just 50% year over year in North America and elsewhere in early March, said Andrew Macdonald, senior vice president of Uber’s mobility and business operations, at a separate tech industry conference. He noted that the company’s rides volume in Miami has recovered 75%, and Atlanta and New York City have rebounded 60%, while the rides rebound on the West Coast has lagged.
Uber has not returned a request for additional details. Competitor Lyft Inc. LYFT, -5.11% has not responded to a request for comment.