Ride-hailing and food-delivery service Uber Technologies (NYSE:UBER) hasn’t rewarded its investors with stellar returns this year, but don’t fret. 2024 isn’t even close to being finished yet, and an important piece of news from California should convince the skeptics to buy Uber stock today.
The Uber share price zoomed up to $80 several times this year before pulling back. That’s frustrating, but patience will pay off in the end. So, I invite you to ride it out and hold your Uber shares even if the road may be long and winding.
A Big Win for Uber in California
For years, Uber drivers in California were considered as gig workers, also known as independent contractors. However, some of Uber’s drivers wanted to get benefits and protections typically associated with full-time employees.
That’s not likely to happen anytime soon, though. Previously, a lower court in California ruled that Proposition 22, which would allow Uber to classify its drivers in California as independent contractors, is constitutional. More recently, the Supreme Court of California upheld the ruling of that lower court.
This means Uber can continue to classify its drivers as gig workers, as opposed to employees. A Reuters report explained why this is crucial for a company like Uber:
“Employees are entitled to minimum wage, overtime pay, reimbursements for expenses and other protections that do not extend to independent contractors, who can cost companies up to 30% less, according to several studies.”
In other words, while the California Supreme Court’s ruling might not be great news for all Uber drivers, it will probably benefit Uber’s bottom line.
Uber’s Shareholders Shouldn’t Worry About Robotaxis
In other news, some Uber shareholders might be concerned about self-driving taxis, or robotaxis, taking market share from Uber. Are these autonomous vehicles likely to put Uber out of business?
That’s not likely to happen in the near future. A study commissioned by Forbes Advisor (via Bloomberg) determined that “93% of Americans have concerns about some aspect of self-driving cars.” Furthermore, 51% of consumers said they were “somewhat or very unlikely to own or use a self-driving vehicle in the next five years,” while “61% of Americans said they wouldn’t trust a self-driving car with their loved ones or children.”
Thus, many consumers don’t trust robotaxis. Besides, Uber Technologies CEO Dara Khosrowshahi seems prepared to accept autonomous vehicles into Uber’s business model. He assured that autonomous vehicle technology “holds a promise of safer rides” and “holds a promise of expanding the marketplace by lowering prices and making mobility delivery available for a wider swath of the population.”
Uber Stock: How Long Until $80? Not Long!
Uber Technologies is undoubtedly the best-known American ride-sharing service. Despite the advent of robotaxis, Uber should continue to thrive for a long time. Moreover, Uber won’t likely have much difficulty integrating robotaxis into its business model.
Also, the California Supreme Court’s ruling upholding of Proposition 22 represents a huge win for Uber. So, this is the time for Uber stock traders to accelerate, not hit the brakes. In other words, grab some Uber shares and prepare for a ride to $80 and higher in 2024’s second half.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
