Uber, Lyft rise as investors expect California voters to pass Prop 22
Uber and Lyft shares rose 4.2% and 7.3%, respectively, as investors expect California voters on Tuesday to pass Proposition 22, which would allow the ride-sharing companies to maintain their current business model.
If it passes, Proposition 22 would exempt ride-sharing and delivery companies from a new California law that forces such gig economy companies to reclassify their workers as employees rather than contractors, and offer benefits such as sick leave and unemployment protection. A successful Proposition 22 could also undermine the lawsuit California has brought against Uber and Lyft for allegedly violating that new law.
But if Proposition 22 fails, Uber and Lyft say they will have to change their business models, likely by cutting the number of workers and raising prices for riders. They previously threatened to shut down temporarily in California this summer before an appeals court extended a stay on the issue.
Uber and Lyft have contributed most of the almost $190 million raised through mid-October to get Proposition 22 passed. The companies have also pushed for Proposition 22 in messages to users on their own apps.
A UC Berkeley poll from late October found 46% of voters were voting yes to Proposition 22, while 42% were voting against and 12% were undecided. MKM Partners released an investor note today with results from its own survey, which found 57% of voters, up from 47% in its Sept. survey, are planning to vote for the proposition.