The ride-sharing company Uber has had a rocky few months on the stock market. But while the brand’s third-quarter revenues may have been disappointing, there is real hope ahead. This is because Uber’s stock recently jumped an impressive 15% to nearly $40.99 on last Wednesday’s stock market. This makes it the highest share price for the transportation company since August 2019.
Such figures came amid a gloomy economic backdrop that had previously seen Uber reporting a loss of 62% per share on $3.13 billion in revenues. Thankfully this loss wasn’t quite as harsh as many analysts had been expecting.
Uber’s sudden bounce back on the stock market came as a result of a victory in the California ballot boxes. This saw a positive result for Proposition 22 that would allow gig economy firms like Uber to keep treating their employees as independent contractors.
Such a move overturned a previous law that only came in 2019. This had ruled that gig economy workers should enjoy employee status along with all of the accompanying protections and workers’ rights.
However, ridesharing companies such as Uber, Lyft, DoorDash, Instacart and Postmates joined together to fund the $205 million campaign that aimed to overturn the law. While there was plenty of vocal protest from labor groups, the end result was that 58% of the voters supported Proposition 22.
The winners of Proposition 22
Uber wasn’t the only transportation company to benefit from the passing of Proposition 22. Lyft’s shares also rose by a respectable 13%, and both companies have aimed to appease labor groups by including some employee protection measures such as a minimum hourly wage and basic healthcare options.
While these new measures will cost Uber plenty of money, the extra expenditure won’t be as bad had Proposition 22 failed. Morgan Stanley had estimated that Uber’s costs would have gone up by as much as 5% had the law not passed, but now the ridesharing company will only see its costs go up by 1%.
The passing of the proposition has far-reaching effects that go beyond ride-sharing. It’s expected to deliver a boost to the food delivery brand DoorDash as it heads to its IPO that’s due before the end of 2020. There have been similar debates about gig economy companies in states like Massachusetts, Oregon and Illinois, and the controversy isn’t expected to die down any time soon. But for now, Uber is a winner on the stock market.