Ride hailing firms Uber Technologies, Inc. (UBER) and Lyft Inc. (LYFT) have been awarded a major and large government contract that in many ways, addresses the question of whether such companies have a future.
Uber and Lyft have been awarded a $810 million contract by the US Federal General Services Administration (GSA). The deal follows four years of negotiations and includes supplying more than 4 million government employees and contractors in the United States with transportation services. Previously, on platforms such as Uber and Lyft, individual Federal employees were also eligible for paid trips. The customer base will be much bigger now.
What kind of growth businesses would earn for their annual profits is not yet understood. But, the U.S. government spends around $200 million a year on ground transportation and some of that money will now go to Uber and Lyft. More significantly, however, taxi services are now part of a gradual phase-out of the resource-intensive and poorly regulated notion of official vehicles. This campaign began several years ago, and is accompanied by a number of trends, including lesser young driver’s licenses in past years. Also the delivery of cars was always a concern, and there were times where cars bought by the state sat in parking lots and were not used for years.
All these issues are solved by taxi services, as well as having more reliable control over the targeted use of public funds.
Uber and Lyft are looking forward to long-term, sustainable agency relationships. In the event of good collaboration, the companies’ long-term prospects will increase.
Uber Technologies Inc. (UBER) was down 2.09% on Monday to $49.66 but is just 4 percent away from its 52-week high of $52.15. Almost same was the loss of Lyft Inc. (LYFT) which fell 2.23 percent on the day but remain successful to gain a bit over the past week.