(UBER), Lyft, Inc. (NASDAQ: LIFT) – BofA On Uber’s Legal Setback: 3 Potential Scenarios

Uber Technologies Inc (NYSE: UBER) is suffering a “legal blow” after a California court ruled that the company with driving should label drivers as employees, and the company serves three possible scenarios ahead, according to BofA Securities.

The Uber Analyst: Justin Post maintained a Buy rating on the share of Uber with an unchanged price of $ 44.

The Uber dissertation: Uber and rival company with rides LYFT Inc (NASDAQ: LIFT) have 10 days to appeal the decision, Post said in a Tuesday note. (See his track record here.)

The analyst mentioned three potential outcomes:

• Uber could give a “mandatory mandate” on appeal that would allow Uber to operate through November if people vote on Proposition 22, which would replace the ruling, he said.

It should be noted that the law only affects the ride-sharing unit and does not affect Uber Eats, Post said.

• Under a prohibited judgment, Uber should immediately comply with the classification. This could lead Uber to increase prices by up to 20% to 30% in big cities – and even more so in suburbs – and many drivers will step down from the platform to take responsibility for lower demand, the analyst said.

• Under this scenario, Uber management could decide to discontinue most if not all rideshare services until November. This option is “more likely” because Uber is likely to lack the infrastructure to transition thousands of drivers from independent contractors to employees, he said.

If Uber eventually emerges on the losing side of a legal battle, there is a risk that other states could follow suit, Post said, adding that Uber’s internal polling data shows support for Proposition 22 to continue.

UBER Prize Action: Shares of Uber were down 1.39% at $ 31.82 at the time of publication Tuesday.

Related Links:

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Photo courtesy of Uber.