Uber is up 12% right now while Lyft is up around 9%
Proposition 22 will roll back California’s controversial AB5 labor law, which went into effect in January. The legislation mandates that companies reclassify many independent contractors as full-time employees.
But Prop. 22 would exempt ride-sharing and delivery companies from AB5. It would also establish pay requirements for drivers and other benefits such as sick leave and unemployment compensation.
“The underlying business models for Uber and Lyft were hanging in the balance if Prop. 22 did not pass in California to keep the contractor model,” Wedbush Securities analyst Daniel Ives wrote in a note to investors Wednesday.
He added the vote was a “landmark victory” for Lyft and Uber stock, which derive a significant portion of their revenue from the Golden State. “This removes a significant overhang and dark cloud for the likes of Uber and Lyft,” Ives wrote.