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We are looking at Uber (UBER) and Lyft (LYFT) today.
Why Uber and Lyft stocks fell today?
Shares of Uber and Lyft were down almost 8% each on Wednesday. The news broke that California may be moving rapidly toward forcing the two companies to hire their drivers as employees.
If California succeeds in forcing the so-called gig economy companies such as Uber and Lyft to hire their independent contractors, it leads to a significant hit to those already unprofitable companies' margins. California says if your business is giving people a taxi ride, you have to own and be responsible for what moves people. The drivers are the business of Uber and Lyft, and they have to be the employees of Uber and Lyft.
In a way, California is questioning the future of the so-called gig economy and independent contractors for everything.