Uber Technologies Inc. announced Wednesday that it will spend $ 250 million in bonuses to lure drivers back to the platform as it prepares for increased demand for transportation. Uber had recently indicated that it hoped to spend money luring drivers back once COVID-19 restrictions were relaxed, and drivers say they are already seeing bonuses. But Uber shares UBER, -2.00% fell 2% to $ 56.89.
“In 2020, many drivers stopped driving because they couldn’t count on taking enough trips to be worth their time,” the company said in a blog post. “In 2021, there are more passengers requesting rides than there are drivers available to provide 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 for Los Angeles-based Rideshare Drivers United, said drivers have been seeing the bonuses, which Uber in its ad referred to as a “boost.” “It’s funny that they call it a stimulus,” he said. “They’re trying to take advantage of ‘we’re trying to stimulate the economy, as if we were the government.’ We know what this is: it’s an advantage to get people on the road. ”Moore added that drivers she knows aren’t“ taking shitty trips ”because they don’t want to risk contracting COVID-19 for little compensation. KeyBanc Capital Market analysts said in a note this week that they have seen “anecdotal evidence indicating that driver supply remains insufficient at key tourist locations.” Ed Yruma, KeyBanc managing director, told MarketWatch that “both Uber and Lyft have been aggressive in trying to win back drivers “through incentives such as bonuses when they reach certain trips or income thresholds. He added that although the lack of supply of drivers is negative for both companies, he expects it to be temporary:” The key conclusion it’s that demand is strong. It’s easier to fix supply problems than demand. ”Uber CEO Dara Khosrowshahi told a conference technology, media and telecommunications in early March that “the part of our business that is not the daily work day has almost completely recovered.” He also said at the time that the company would change the incentives from attracting passengers to drivers to ensure it was prepared for the rebound in travel demand. The company saw its travel or mobility business rebound to declines of just 50% year-over-year in North America and elsewhere in early March, said Andrew Macdonald, Uber’s senior vice president of business and mobility operations, at a separate conference for the tech industry. He noted that the company’s travel volume in Miami has recovered by 75%, and Atlanta and New York City have recovered by 60%, while travel on the West Coast has lagged. Uber has not returned a request for additional details. Competitor Lyft Inc. LYFT, -5.11% did not respond to a request for comment.