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Monday Nov 25 2019 13:51
2 min
Transport for London has stripped Uber of its licence to operate in the capital. The company has 21 days to lodge an appeal, which it has said it will do, and it continue to operate until such appeal is completed.
Shares printed -5.9% in pre-market trading at $27.82 at one stage before paring losses just ahead of the open to trade 4.3% lower. The stock is barely a couple of dollars away from theall-time low. It could be a rocky session out there today.
Uber has suffered a big blow with this ruling. London, with about 3.5m users, is the largest market in Europe for Uber. London is one of the group’s ‘fab five’ cities that account for around a quarter of global revenues. There is a clear and obvious hit to revenues, if the ruling is upheld, which it seems likely it will. Competition in the shape of Bolt and Ola are ready and willing to step in at the drop of a hat in the capital and it could be forgotten pretty quickly once gone. At least a drop in revenues should also equate to narrower losses.
More broadly it betrays the scope and depth of the legal and regulatory problems faced by Uber. The list of legal issues is long and broad in its scope and geography. These present ongoing overhang for the stock as, whilst there have been problems about corporate culture, largely the run-ins with the regulators and policymakers pertains to the very structure of the business itself and how it operates; taxation, labour laws and consumer safety are the milking stool of regulatory instability. It betrays also the fact that cities and local lawmakers do have considerable leverage should they wish to use it. Uber will continue to face elevated competition from local rivals and a high-degree of regulatory scrutiny that threatens to undermine how it does business.”
Risk Warning and Disclaimer: This article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform. Trading Contracts for Difference (CFDs) involves high leverage and significant risks. Before making any trading decisions, we recommend consulting a professional financial advisor to assess your financial situation and risk tolerance. Any trading decisions based on this article are at your own risk.
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