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As of 12:29 21 Sep 2019
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Heavy strain for new gig economy firms

Dave Lee

North America technology reporter

uber worker

The California senate has passed AB5 — a law that paves the way for Uber, Lyft and other gig economy workers to gain employee rights.

Uber and Lyft had lobbied hard against the bill, including proposing a $21 minimum wage for drivers.

It is expected to put heavy strain on the newly-public gig economy firms.

Uber announced it was laying off 435 employees today in an effort to cut costs. AB5 could mean new requirements on holiday pay, healthcare and other expenses.

AB5 will not become law until signed by California governor Gavin Newsom. He has already endorsed it, so it is expected to be a formality.

Gig economy workers get employee rights

The BBC's Silicon Valley reporter tweets

How can a company be valued at billions, but not make any profit?
You can't have a company worth billions of dollars and not make a profit, right? Wrong, and here's why.

Rivalry with Lyft weighs on Uber

BBC Radio 5 Live

Uber sign
Getty Images

Sales and user numbers at Uber rose strongly in the first quarter and yet the newly floated ride-sharing and food delivery app business still reported a $1bn loss.

Will those who bought shares in the flotation be regretting their decision?

Eimear Daly, chief economist at Macquarie Bank, tells Wake Up to Money that Uber's share price actually rose after the figures were released.

"What was clear from the results was the amount of strain Uber was under," she said.

"They basically pointed to Lyft, a domestic rivals in the US market, and said that because of that for riders and drivers, they had to throw incentives at them and they lost a lot of pricing pressure."