The TLC regulations passed by New York City have compelled the two ridesharing companies to refrain from hiring new drivers, according to Politico. It comes as a setback to both Uber who is on the IPO path and Lyft, which has just gone public.
On one hand, Uber had blocked the hiring of new drivers from the 1st of April; Lyft halted any new drivers from signing on April 15. According to the TLC regulations, the ridesharing company is obligated to pay drivers in the city $17.22 per hour after expenses have been paid. The new TLC regulation passed in New York City came into effect in February.
Uber and Lyft have confirmed that they have stopped hiring new drivers as a result of the new TLC regulation. The companies posted and confirmed the news on their websites. Uber said it wouldn’t hire new drivers in NYC “due in part to new TLC [Taxi and Limousine Commission] regulations.” Lyft went on saying, “Because of TLC regulations, we’re currently not accepting new drivers in New York City.”
The law came into effect with the intention of disciplining the ridesharing companies of having too many drivers on the roads and not carrying passengers. Having plenty of drivers, though is an asset for these ridesharing companies as it gives the rider ample availability. It also delimits the wages of the drivers. In addition to this, it leads to congestion of traffic. Moreover, it creates an unfair advantage over taxi services that are more regulated.
This Could Be Alarming To The Companies Doing IPOs In The Space
The news serves as an alarm to the investors who find scope in these ridesharing companies. Moreover, it sets as an example that a similar law could come into being in other cities as well. The objective behind the law was to provide decent wages to the drivers and it appears that much has been achieved.
The lesser the number of drivers on the road the more the wages that the current drivers would earn. In fact, Politico reported that an NYC presentation this month showed that drivers had earned $56 million more than they would have without the regulation.
The law serves as a impending risk to both companies. Before going public, Lyft discussed the limitations that now hold the company to “a wide range of laws and regulations, many of which are evolving, and failure to comply with such laws and regulations could harm our business, financial condition, and results of operation.”
Lyft also said in its S-1 filing that “Our business depends largely on our ability to cost-effectively attract new riders and increase utilization of our platform by our existing riders.” And Uber said in an SEC filing that “Our success in a given geographic market significantly depends on our ability to maintain or increase our network scale and liquidity in that geographic market by attracting drivers.”
With the constant apprehensions of both the companies in dealing with the regulatory changes, it is extremely difficult to understand how effective these ridesharing companies can become. However, it becomes candid for the investors to keep a close eye on how the companies respond to these regulations and whether other cities follow New York’s lead.
Blackberry Stock Price Corrects 23% In A Month, A Value Buy?
There was a time when BlackBerry Limited (BB) used to be one of the leaders of the telecommunication industry by virtue of its smartphones. However, the company’s glory days are well in the past and the stock declined by more than 15% recently after it released its results for Q1 2019. The stock is now trading less than $8 but at the same time, it is important to note that the company has managed to deliver as far as its top-line figures are concerned.
Poor Earnings Lower Blackberry Stock Price
The software and services division is now the company’s most important division. It has emerged as the biggest revenue generator for the Canadian company. Overall sales for Blackberry rose 16% year over year in the latest reported quarter.
However, in the software and services, it was a far more pleasing picture. Its GAAP revenues rose 27% year over year. The company seems to be on the right track in terms of its plan to turn around. But the market doesn’t seem to take a fancy to it. The reasons behind this might have something to do with allegations made by certain parties.
They say that the company uses non-GAAP methods to report earnings. If there is any kind of accounting cloud over a company, growth may be far away.
Where Does This Leave Blackberry Stock Price?
However, Blackberry has been quick to defend itself against these allegations. Financial disclosures of the company are fully SEC compliant. It remains to be seen whether the SEC takes an interest in the matter.
This problem has been the biggest reason behind the underperformance of Blackberry stock price. That’s despite the company’s decent performance. The acquisition of machine learning company Cyclane is also a positive development. But it remains to be seen how it affects Blackberry’s future growth.
Uber Technologies (UBER) Stock Price Hits $45 Mark Again; Are Delivery Stocks Set To Fly?
Uber Technologies (UBER) stock price hit its IPO level of $45 again. Since its IPO, this becomes the fourth time that the company has hit its $45 mark. Each time it has been a real challenge for the company to rise above the IPO price.
Uber has made its name through its market dominance however it’s growth continues to be slow-paced and also has continuous losses, making Uber less attractive to many. However, the thing that Uber has done is bring more attention to the on-demand and delivery stock arena.
Special Delivery: Small-Cap Delivery Stocks Are Gaining Ground In Cannabis
Driven Deliveries Inc. (OTC: DRVD) is one of the only publicly traded cannabis delivery service operating in the United States. Now that’s what we call first-mover advantage. Driven Deliveries provides on-demand marijuana delivery in select cities where allowed by law. The service provides the legal cannabis consumer the ability to purchase and receive their marijuana in a fast and convenient manner.
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Consumers are growing increasingly lazy with most of all purchases from retail to food shopping being done online. And now you can add weed to that list. Driven Deliveries (OTC: DRVD) is quickly gaining steam in legal US markets as the new delivery option for customers is resulting in increased revenue and transactions for dispensaries.
Food delivery apps and services such as GrubHub and Uber Eats have already expanded revenue generated in the food-service industry by 22% or more. Consumers love getting what they want without having to leave their house to get it, plain and simple.
In Spite Of Being A Broken IPO, Still Worth An Investment
Cannabis is just one small niche expanding into the on-demand technology market. Uber has always managed to capture the headlines. This week it did that by launching itself in the sixth German city, Hamburg. The company further has plans to acquire Postmates which gives UberEats a heavy competition provided the price is right.
McDonald’s exclusivity with Uber also came to an end this year with the former getting into a contract with DoorDash. The company is set to report its financial results for Q2 on August 8. Uber had given accounts of its earlier performance through the prospectus issued during the IPO.
UBER stock price has been trading at $40 range since June. But, the figure is likely to change in the coming future for better. Uber has been able to disrupt various markets like those of food delivery, personal mobility, and freight logistics. In Q1 results, the company had reported 93 million monthly active platform consumers.
The revenue of the company has been on a slow rise especially on a net basis. The company sends a major portion of the money received to its drivers to keep them encouraged and active. This is a move that is not going away anytime soon. The deep deficits could also prove to be advantageous for the company.
Even though Uber looks like a broken IPO, it still leads in its industry. The concerns with the valuation persist still for good reasons. Uber continues to ride at a market cap which is five times the current year’s revenue. But, one would have to wait till 2025 to see a positive earning in the growing market.
Stock Price Friday Update – July 19, 2019
ROKU Stock Price Hits Another Life Time High: Good News For Tech Stocks?
In 2019 alone, ROKU stock has risen by as much as 271% as the company continued to add new customers and boosted revenues from advertising. However, could the latest surge be a signal for the next bull market in tech?
3 Biotech Stocks To Watch After Big News This Month
Here is a look at 3 biotechnology stocks that proved to be winners recently.
IPO News: Medallia Goes Public On Friday, July 19
Over 14 million shares of the company will be available to be traded at $16 to $18 per share on NYSE. And of course, investors will be watching MDAL stock price closely. Bank of America Merrill Lynch, Citigroup, and Wells Fargo Securities will oversee the IPO.
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