NEW YORK, Aug. 25, 2015 /PRNewswire/ -- Illustrating the significant challenges facing rideshare companies, policy and financial analyst Lawrence Meyers analyzes a cartoon depicting the regulatory and economic nightmares confronting the sharing economy's poster child.
"Rideshare Headwinds," from animator Chris Hermans, demonstrates how insurance issues; litigation; regulatory battles; price wars; rideshare's hidden costs; municipal economic interests; and improving employment data will degrade the success of companies such as Uber Technologies.
"Amidst hype over Uber and pending IPO valuations, the financial media ignores the storm clouds on a collision course with rideshare," Meyers said. "The artist provides a graphical representation of the long road ahead for rideshare, and why taxi medallions – particularly in New York City – will win this race."
"There are lawsuits regarding employee status pending in California that could cost rideshare companies tens of billions of dollars," Meyers explains. "Eventually we will see price gouging litigation in response to surge pricing, and lawsuits under the Americans with Disabilities Act."
Meyers cautions that economic forces will erode value to drivers. "A race to the bottom is underway in many cities. Historically, this results in declining driver profits. They will forego repairs and maintenance, making their cars increasingly unsafe. Municipalities will not want to expose citizens to under-maintained vehicles and kick rideshare out of their jurisdiction," Meyers added.
Drivers are becoming increasingly dissatisfied with rideshare, as they discover profit margins are smaller than expected. Meyers' June white paper, "Towards a Cost Estimate of A NYC UberX Driver," found that 68% of first dollar-per-mile in revenue is lost to expenses. "Uber's own study showed 50% driver attrition over one year," Meyers said, "That, along with the bevy of complaints at websites like Uberpeople.net, shows widespread dissatisfaction with rideshare."
"Rideshare driver pools will shrink when employment improves. Cities have a vested interest in protecting revenue generation of medallion auctions. They will throw every regulation they can at rideshare."
Meyers also criticizes taxi medallion short-sellers. "Their initial reports claim to be from an established corporate entity when no such entity existed. Given that they began their entire campaign with a lie, everything else they said should be viewed in that context."
"Ultimately, rideshare simply cannot compete with the New York City street hail. That's why medallion lenders have experienced zero portfolio losses," Meyers concludes. "Taxis are here to stay."
SOURCE Lawrence Meyers