Uber, Lyft stocks soar after big election win in California lifts overhang

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Shares of Uber Technologies Inc. shot up 11.0% toward a near 9-month high in premarket trading Wednesday, after the ride-hailing company won an election fight in California, where the passing of Proposition 22 allows drivers to be considered independent contractors instead of employees. Rival Lyft Inc.’s stock soared 14.9% ahead of the open. The stocks had been under pressure heading into the election, with Uber’s stock down 5.2% over the past month and Lyft shares down 5.1%, while the S&P 500 gained 0.6%. “With the controversial AB5 legislation enacted in the State of California which was focused on classifying drivers as employees and not contractors, in essence the underlying business models for Uber and Lyft were hanging in the balance if Prop 22 did not pass in California to keep the contractor model,” Wedbush analyst Dan Ives wrote in a note to clients. “Taking a step back, this removes a significant overhang and dark cloud for the likes of Uber and Lyft and ends this ‘head scratching’ AB5 legislation chapter that was a major threat to the future of the Gig Economy and thousands of drivers throughout California.”
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