$13 billion: That’s how much Uber and Lyft gained in combined market value on the stock market after Californians voted to approve Prop 22 on Tuesday, allowing them to reclassify their drivers as independent contractors, according to Business Insider.
That’s an incredible return on investment for the ride-sharing companies who, along with DoorDash, Postmates, and Instacart, spent roughly $202 million on a campaign for a yes vote on the ballot measure, making it the most expensive initiative in California’s history. By contrast, the opposition camp, led by labor unions, raised just $19 million for their campaign.
It looked like everything was finally coming together for Lyft: After years of bare-knuckled competition with Uber, rising losses, constant struggles with regulators, then a rocky IPO, it had finally gotten on track. “Profitable growth” over growth at all costs was the new management mantra, and the company even had a target: breakeven, at least by its adjusted EBITDA yardstick, as soon as the last quarter of 2021.
And then the coronavirus hit.
Uber is currently an unprofitable business. Lyft is too. Both have aspirations to become profitable businesses in the next one–two years, but right now, they aren’t even close. How can they achieve profitability, and what impact would that have on your fare to get from the airport to your Airbnb?
There are a few estimates on how much Uber loses per ride. It’s enough that, up until its initial public offering, your Uber ride was substantially subsidized by Uber’s investors. …
Late Tuesday evening, the California state legislature approved a bill that would make it more difficult to classify workers as independent contractors. Its passage followed a long negotiation with on-demand app makers like Lyft, Uber, and Doordash, who have said that classifying their on-the-ground workers as employees would fundamentally change their business models. Uber and Lyft sought an amendment to the bill that would essentially exempt them from the law — they didn’t get one.
California governor Gavin Newsom has already pledged his support for AB 5 in a Sacramento Bee op-ed, and is expected to sign it into law…
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