Uber and Lyft shares jump after US ruling considers third-party drivers

Shares of transit app companies Uber and Lyft rose on Tuesday following a US court decision that deemed drivers registered on the platforms as independent third parties, rather than employees.

A panel of three judges on the California state court of appeals on Monday overturned a lower court decision that in 2021 found a measure known as “Prop 22” unconstitutional.

The measure passed in November 2020 exempted app drivers from a 2019 state law known as AB5 that makes it difficult to classify workers as independent contractors instead of employees.

Jefferies analysts estimate that Lyft, DoorDash and Uber potentially averted a $20 million to $170 million hit to 2024 results.

“The decision paves the way for continued outperformance of Uber stock,” said Jefferies analyst John Colantuoni, betting on the company’s massive scale and network.

Analysts expect the ruling could be appealed before the California Supreme Court, which could take months to decide whether to accept the case and more than a year to issue a decision.

Shares of Lyft, which hit an all-time low on Monday, were up 4.4% as of 12:27 AM ET. Uber advanced nearly 6% and DoorDash advanced 5.5%.

Source: Terra

Rose

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