Rideshare Shock: PDL Capital, Inc. Reports NYC Taxi Commission Data Shows Virtually No Impact on Taxi Medallion Revenue

New York, NY (PRWEB) February 11, 2015

Data obtained via a Freedom of Information Law request from the New York City Taxi & License Commission shows negligible impact on taxi medallion revenues for all of 2014.

Despite a fourfold increase in ride-share supply, to the point where UberX drivers now outnumber taxi medallions, average daily farebox (including credit card tips) fell only 2.3% year-over-year to $ 6,890,512 from $ 7,052,853, and only 2.77% when also including cash tip estimates, to $ 7,324,599 from $ 7,533,368. This came after 2013’s 9.59% increase in average daily farebox compared to 2012, including credit card tips.

This data does not factor in the 17% taxi medallion fare increase instituted in mid-2012 by the TLC. On a constant-fare basis, 2013 average daily farebox (including credit card tips) fell 6.33% to $ 6,028,079 from $ 6,435,493. 2014’s decline improved to 2.3% and $ 5,889,326 on a constant-fare basis.

“The data is conclusive. That taxi medallion revenue should fall by such a tiny amount, given the increase in UberX drivers from 4,000 to 16,000 in 2014, demonstrates the resilience of the taxi medallion,” says Lawrence Meyers, CEO of PDL Capital, a nationally-recognized specialty lender, broker, and consultant.

“For all the hype surrounding ride-share, taxi medallions have a perpetual advantage. They are the only vehicle that may legally accept street hails in Manhattan where 97% of all taxi rides originate. New Yorkers value their time more than anything else, and are not willing to wait around for a ride-share vehicle to show up, with a stranger driving the car, an unknown vehicle maintenance record, and unresolved concerns regarding insurance,” Meyers adds.

Although taxi medallion values have fallen in recent months, Meyers says the decline has three simple explanations.

“The primary reason,” he states, “is that the city has added 2,000 new yellow medallions, and several thousands green and livery licenses. Obviously, as asset supply increases, we would expect a corresponding decline in the asset’s value.”

Meyers also states that uncertainty surrounding ride-share impact has contributed to the decline, though he expects that uncertainty to be partially mitigated by the release of this data. Finally, he points out that there are so few taxi medallion transfers that the corresponding illiquid market would create significant price volatility.

Meyers also notes that by extrapolating TLC data, it is revealed that annual gross revenue from a medallion is almost $ 200,000. With certain medallion financial service providers offering loan-to-value ratios of 40–50%, owners gross ten times the revenue necessary for debt service.

“Moreover, most drivers lease their taxi medallion out for 12 hours a day. Even if leased on a daily basis, at half the market rate, a driver would collect what he needs to service his taxi medallion debt every year.”

Meyers concludes by saying that taxi medallion brokers, lenders, and investors would be wise to ignore the hyperbole spread by those attempting to short-sell the stocks of taxi medallion lenders. “They engage in fear-mongering by making provably false claims about idle taxis and loss of market share. The TLC data exposes their tactics. A 3% revenue decline is hardly proof of coming foreclosures. If anything, medallion financial services providers have been needlessly oversold.”

The entire report can be viewed at: http://ift.tt/1AlpiMs

About PDL Capital

PDL Capital is a specialty lender and broker. CEO Lawrence Meyers is a nationally recognized expert in specialty lending. He frequently consults for hedge funds and private equity funds on matters of consumer and commercial finance. His work has appeared on numerous websites including Breitbart.com, SeekingAlpha, InvestorPlace, WyattResearch, and The Motley Fool.

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