Shareholders in Uber and Lyft had one of their best days since the pandemic began, as the stocks of both ride-hailing companies soared 15% and 11%, respectively, in the wake of Tuesday’s approval of Proposition 22 in California. The vote overrides a state law requiring their drivers to be classified as employees rather than independent contractors.
That’s undoubtedly good news for Uber and Lyft—as well as DoorDash, Instacart and other “gig economy companies” that rely on armies of freelance workers. They won’t have to rethink their business models. Even so, Wall Street’s reaction appears overdone, particularly in Uber shares, which are now up 38% for the year to date. Lyft, on the other hand, is down 32%.