Categories Analysis, Technology

Lyft stock gains for third day after favorable labor board decision

After the disappointing Wall Street debut last month, shares of Lyft (Nasdaq: LYFT) have continuously struggled to find a footing. Though the stock staged a recovery and moved up above the IPO price, after staying low for nearly a week, the momentum was not sustained.

Lyft received a boost this week after regulators ruled that drivers partnering with ride-hailing companies are independent contractors, not employees. The government made the observation in a lawsuit involving online taxi firm and Lyft’s competitor Uber.

Lyft's Key Business Metrics - 1Q19

Lyft’s shares gained more than 3% during the early trading hours of Thursday, continuing the uptrend that started a couple of days ago. They have advanced nearly 14% so far this week after ending the last week on a dismal note – hitting a record low. The terms of partnerships with drivers and their compensation is a crucial factor that determines the financial health of taxi operations.

Lyft got a boost this week after regulators ruled that drivers partnering with ride-hailing companies are independent contractors, not employees

For both the managements of ridesharing firms and investors, lack of clarity over driver recognition has been a cause for worry and for that reason the market keeps a tab on the dynamics regularly. The advisory memo from the National Labor Relations Board came as a morale booster for investors as it could stop drivers from creating trade unions. Several lawsuits are currently pending, in which drivers seek to be recognized as regular employees.

Earlier this month, Lyft stock crashed after the company reported a massive loss for the March quarter, in its first quarterly report after going public. The $9.02-per share loss was sharply wider than the loss estimated by analysts, though revenues nearly doubled to $776 million.

The government’s decision has brought a big relief to Uber, which has been facing multiple cases for allegedly misclassifying employees as contractors. The company in a statement expressed its resolve to step up the quality of independent work and ensure flexibility in the terms of partnerships with drivers and couriers.

The general outlook for the taxi-hailing sector is quite bullish, given the opportunities it offers beyond ridesharing. While preparing for its public listing, Lyft recently ventured into bike-sharing business, which has remained an unexplored area for long. Currently, it is doing the groundwork to foray into autonomous transportation.

We’re on Apple News! Follow us to receive the latest stock market, earnings and financial news at your fingertips

Most Popular

United Parcel Service (UPS) seems on track to regain lost strength

Cargo giant United Parcel Service, Inc. (NYSE: UPS) ended fiscal 2023 on a weak note, reporting lower revenues and profit for the fourth quarter. The company experienced a slowdown post-pandemic

IPO Alert: What to look for when Boundless Bio goes public

Boundless Bio is preparing to debut on the Nasdaq stock market this week, and become the latest addition to the list of biotech firms that have launched IPOs this year.

Nike (NKE) bets on innovation and partnerships to return to high growth

Sneaker giant Nike, Inc. (NYSE: NKE) has been going through a rough patch for some time, with sales coming under pressure from weak demand and rising competition. Post-pandemic, the company

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top