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💎 Reveal Undervalued Stocks Hiding in Any Market Get Started
Ride-sharing apps rise after California court upholds most of gig driver law
© Reuters.
By Scott Kanowsky
Investing.com -- Ride-sharing apps Uber Technologies Inc (NYSE:UBER) and Lyft Inc (NASDAQ:LYFT), as well as food delivery platform DoorDash Inc (NYSE:DASH), all saw their shares rise in premarket U.S. trading on Tuesday after a California appeals court ruled that the companies can continue to treat their workers as independent contractors.
The three-judge panel overturned a lower court decision that had deemed Proposition 22 - a voter-approved initiative allowing the apps to classify its drivers as independent contractors - unconstitutional. The appeal was backed by a group representing the companies and several other organizations.
In a statement, Uber's chief legal officer Tony West called the ruling a "victory for app-based workers and the millions of Californians who voted for Prop 22." But the Service Employees International Union, which filed the initial challenge to Prop 22, is still expected to appeal the decision to the state's Supreme Court.
Analysts at Bank of America noted that they think most investors in the firms were bracing for the case to amount to a loss for the so-called gig industry, adding that the ruling is a "net-positive" for the businesses.
"[I]t reinforces the value of a ballot initiative as a bargaining chip for the industry in other states," the Bank of America analysts said in a note to clients.
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