Uber, Lyft Rise Amid Optimism for California Labor-Law Proposal

Uber and Lyft shares are up as investors are optimistic that California will pass a proposition to classify their workers as contractors, not employees.
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Shares of ride-hailing titans Uber Technologies  (UBER) - Get Report and Lyft  (LYFT) - Get Report rose amid optimism that California voters on Tuesday will approve Proposition 22, which would classify the companies’ drivers as contractors rather than employees.

That proposition would override a 2019 law that classified the drivers as employees of the San Francisco companies.

Lyft recently traded at $26.59, up 8.5%. The shares are off 39% year to date. Uber recently traded at $36.10, up 3.7%. The stock has climbed 21% year to date.

MKM Partners analyst Rohit Kulkarni cited a survey showing 57% voter support for Proposition 22, up from 47% in an earlier survey, Bloomberg reports. 

The latest poll showed that the amount of undecided voters fell to 21% from 36% and that awareness among voters of Proposition 22 climbed to 89% from 78%.

Lyft is more exposed to the vote than Uber because about 15% of its pre-covid bookings came from California, Kulkarni said. 

He has a buy rating on Uber, with a share-price target of $40, and a neutral rating on Lyft, with a target of $33.

Last month, German business publication Manager Magazin reported that Uber has offered more than 1 billion euros ($1.2 billion) to purchase its European rival Free Now, which is jointly owned by BMW and Daimler.

Daimler was prepared to let Free Now go, while BMW was more open to the idea of offering Uber a stake in Free Now, the publication said.

Free Now is based in Hamburg and serves more than 100 European cities with both taxi and ride-hailing service.

Gaining hold of Free Now would give Uber a commanding position in the European taxi and ride-sharing market, MarketWatch reports.