Shares Uber and Lyft have dramatically grown in the course of trading on Wednesday, as Californians, in addition to their choice of the future President and the Congress, voted for the preservation of the work by contractors on the platforms taxi.
Stock Uber (UBER) and Lyft (LYFT) grew by a record of 14.6% and 18.3% (respectively) in the course of trading on Wednesday, after the announcement of results of voting Californians against the bill of the state on labor, known as the “AB5”.
The bill provides for the retraining of workers in companies with a business model of applications like Uber, Lyft and others, of the status of the contractors staff with the provision of all social guarantees of the relying.
The company said that this model will kill their business in the state, as they will have to significantly increase prices and reduce the number of drivers that will affect how the situation of the labour market and will increase prices for passengers. The California market represents a significant share of business for Uber in about 9% and about 16% to Lyft.
According to the office of the Secretary of state of the state voting on the bill “AB5” on Wednesday in California showed that more than 80% of the vote, almost 58% voted against and 42% supported.
Funding vote, a $205 million was carried out Uber, Lyft, and Instacart, DoorDash and Postmates. Analysts noted that though the amount was a record for such votes in the history of California, it is significantly less than that required measures would have “AB5” at the recharacterization of employees. According to one estimate, Uber and Lyft will save more than $100 million per year cost to pay.
The company’s taxi apps and food delivery has offered its employees instead of full benefits, more compact package with reduced medical subsidies and accident insurance, some compensation of costs on gasoline and other transportation costs, as well as “the guarantee of a minimum income”, equal to 120% of the minimum wage applicable to the “busy” time of drivers (defined as the time between the acceptance of the application for the trip and end of trip). According to analysts Morgan Stanley, it will increase the labor cost Uber about 5%.
“We expect that other States will now be less aggressive in trying to adopt similar legislation to AB5, which will be an important victory for Uber and his colleagues,” said analysts at Bank of America on Wednesday. “Overall, though Uber continues to face regulatory challenges in the UK and other States, voting helps to reduce uncertainty and can open shares to new investors that could potentially contribute to their higher rating”.
The conditions of a pandemic, significantly affected financial performance in the second quarter of Uber and Lyft when their income fell by 29% and 61%, respectively. At the same time, the shares of the company Uber operating all over the world and having a meal delivery business had returned to growth, rising by 20.3% YTD. In turn, the limited business Lyft only the U.S. business and late delivery service of food became the reason of decrease of shares by 39% since the beginning of the year.
