California ruling a ‘big win’ for Uber, Lyft and DoorDash, says Jefferies

Jefferies analyst John Colantuoni notes that a three-judge panel in California reversed a lower court’s 2021 ruling that deemed Prop 22, which allowed gig companies to classify drivers as independent contractors with added benefits, unconstitutional, calling the ruling to uphold Prop 22 a "big win" for Uber (UBER), DoorDash (DASH) and Lyft (LYFT). However, the firm assumes that s decision will likely be appealed to the state’s Supreme Court, which could take months to decide whether to accept the case, and over a year to issue a ruling. Still, Prop 22 will remain in effect while the ruling is appealed and the firm’s estimates show a substantial cost headwind has been avoided and it expects a positive stock reaction from the ruling. Jefferies maintains a Buy rating on Uber, a Hold on Lyft and an Underperform rating on DoorDash, which it calls "the most expensive name in platform Internet."