Ride-Sharing Platforms Lyft And Uber Rally

Ride sharing platforms Lyft and Uber saw their shares climbing higher on Wednesday, with the former up as much as 5.8% before closing with a 2.4% gain, while the latter traded up as much as 4.1% before settling with a 1.5% gain.

Lyft chart 5 days

The gains come in the wake of the passage of Assembly Bill 5 in California on Tuesday. That law could be disaster for companies such as Lyft and Uber, who depend on classifying their workers as contractors.

The AB5 would instead have the workers classified as employees, forcing both companies to pay Social Security and payroll taxes, unemployment insurance, and state employment taxes, while adhering to federal and state regulations on minimum wages and working conditions.

Uber sees 17% of its rides booked in California, and Lyft has 24% of its rides booked in California.

The gains on Wednesday came following comments from California governor Gavin Newsom, in which he said he is personally involved in “ongoing negotiations” with both companies.

Both Uber and Lyft have seen their stocks come under pressure in recent weeks as investors have been losing faith in the gig economy that powers both companies. After hitting all-time lows last week, the bounce from this news is welcome to long-term bulls.

Wednesday’s gains also come on the heels of a nearly 4% rise in Uber shares on Tuesday after the company announced it was cutting 435 engineering and product development jobs. Those come on the heels of the 400 marketing jobs, or roughly one-third of the department that were cut in late July.