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Uber Technologies (UBER) Warns of Steep Price Hike: Here's Why

According to a Financial Times report, Anabel Díaz, head of Uber Technologies’ UBER mobility division in Europe, has warned of a price hike of as much as 40% if Brussels’ proposals to classify gig workers as de facto employees are passed.  A reclassification of gig workers as employees would invariably raise labor costs.

In the interview with FT, Diaz also said that if the European Union or EU’s proposal on gig workers materializes, the ride-hailing giant may cease to operate in hundreds of cities. If the proposals see the light of day, riders would be inconvenienced as they would have to wait longer for rides with fewer drivers around. This may result in UBER consolidating working hours across fewer drivers. UBER would be forced to raise prices to sustain operations in such a scenario.

Per Diaz, “If Brussels forces Uber to reclassify drivers and couriers across the EU, we could expect a 50-70 percent reduction in the number of work opportunities.” Her warning comes as the EU lawmakers are involved in negotiations to finalize the new law's text, aimed at improving economic conditions for gig workers in the bloc. Investors would keenly await further updates on this burning issue.

Price Performance

UBER shares have had a dream run on the bourse this year, gaining 92.4% year to date compared with the industry ‘s 54.2% uptick.

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Zacks Rank & Other Picks

UBER currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Investors interested in the same industry may also consider LivePerson LPSN and Marchex MCHX , each currently carrying Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for current-quarter earnings surged 200% at LivePerson over the past 60 days. Shares of LPSN, which focuses on conversational artificial intelligence, have increased 5% over the past three months, driven by AI growth.

The Zacks Consensus Estimate for current-year earnings increased 20% at Marchex over the past 60 days. The company delivered a positive earnings surprise of 57.14% in its last reported quarter.

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