Lyft And Uber To Offer Stock Options To Drivers Ahead Of IPOs

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This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

The world's two largest mobile ride-hailing companies are set to each move forward with initial public offerings this year. Uber and Lyft will be compensating their oldest and most loyal drivers in the process.

Uber and Lyft both categorize their drivers as independent contractors and not direct employees, and so drivers aren't eligible for many benefits such as 401k and health insurance plans. The relationship over the years hasn't been great on either side as drivers often work for what amounts to barely minimum wage and are left unable to get expenses reimbursed like typical employees would.

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In a move to somewhat improve this strained relationship, stories have broke that Uber and Lyft will be offering the more senior drivers cash bonuses before the eventual IPOs hit and with an even sweeter option: the ability to convert those cash bonuses into shares of their respective employer ahead of the general public. IPOs often get pumped above the initial offering's price so this could present a way for hopeful drivers to further increase this once-in-a-career payday.

For one, Lyft is going to provide drivers with at least 10,000 trips a cool $1,000, and this amount would scale up depending on how many total trips and years the person has been driving for them. Some drivers for Uber who have completed 20,000 rides could be receiving up to $10,000 in cash or equivalent stock according to one of Reuters' sources.

Lyft is widely expected to release some pre-IPO paperwork in the coming days which will shed some light on the driver-compensation program the firm is preparing. They are widely expected to beat Uber, that's valued as high as $120 billion, to an IPO as Uber is said to still be preparing paperwork to move the process forward. Uber was previously valued at around $76 billion in the private equity market.

Lyft should be valued between $20 and $25 billion in its public offering, a nice boost from the current private market $15 billion valuation it holds.


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