Shares of Uber Technologies Inc. hit their highest prices in more than a year on Friday, as Wall Street continued to celebrate the company’s big win in California as a sign that regulatory concerns about driver classification Should be reduced elsewhere.
Proposition 22, which would give an exemption to Uber UBER,
Lyft Inc. LYFT,
Analysts at Loop Capital wrote that a California law required other app-based gig companies to treat their drivers as employees, removing a major risk factor and allowing investors to evaluate recovery scenarios Approve for
“We consider the win particularly notable because it demonstrates Uber’s leverage with the government through popular opinion,” Brian FitzGerald, a Wells Fargo analyst, said in his note to investors.
See: Uber and Lyft win to be hired as drivers rather than employees in California
Uber shares gained 6.9% to $ 44.87 after Friday’s high hitting $ 45.38, the highest closing and intraday prices for Uber stock since June 2019, long after the company’s May 2019 initial public offering Not later The shares already received a major boost after Tuesday’s election, as analysts’ regulatory and cost concerns turned to optimism.
Uber Chief Financial Officer Nelson Chai said on Thursday’s earnings call that the company expected a 5% cost increase related to the implementation of Proposition 22, which would include a possible increase in wages and some new benefits for drivers, but The company will pass those costs on to consumers. Uber warned of a higher cost if the ballot initiative failed.
In addition to regulatory issues, Uber’s third-quarter earnings report was mixed. Its red-hot delivery business is offset by what RBC Capital Markets calls “glacial recovery” by its ride business.
Uber CEO Dara Khosroshahi emphasized distribution and said his company could be called a “fundamental behavior change” in consumer habits.
Analysts at William Blair stated, “We believe the company is well positioned to take advantage of the increasing shift in consumer behavior coming out of the crisis.
Uber Mobility’s revenue fell 53% year-over-year to $ 1.37 billion in the quarter, while its delivery business was $ 1.45 billion, a 125% increase from the year-ago period. It reported a loss of more than $ 1 billion, or 62 cents.
Of the 26 Uber analysts tracked by FactSet, 21 have a buy rating on the stock, while three say two sell the stock. According to FactSet, the average price target on Friday was $ 41.80, about 7% below the go rate.