Uber Secures London License for Thirty Months

After securing New York City’s yellow taxis, ride-hailing service provider Uber Technologies (UBER) has achieved another feat by securing a 30-month license to operate in London, as per Reuters.  

The industry is already facing driver supply challenges and rising fuel prices, which are hitting their bottom lines, as companies are spending more to incentivize drivers. Uber’s shares closed down 1.8% at $34.06 on March 25. Its shares have lost 22.5% year-to-date.

Uber Wins London License

“Uber has been granted a London private hire vehicle operator’s license for a period of two and a half years,” a spokesperson for Transport for London (TfL) said on Saturday.

The win comes after years of battling with the city’s transport regulator over safety and security concerns. Uber has become more U.K.-friendly and has made improvements to its London operations.

London remains one of the most important markets for Uber in the U.K. and one of the five most important markets in the world. Uber started operating in London in 2012, and the city hosts some 50,000 drivers from the company.

Last year, Uber even won the favor of the U.K.’s GMB union by offering driver benefits, holiday pay, and minimum wages to drivers. Moreover, the company has vowed to become a 100% electric platform in Britain by 2025.

In 2017, the TfL had accused Uber of hiding crimes, and in 2019, the TfL had revoked Uber’s license for not reporting drivers who were using the app under false identities.

During both instances, Uber and the regulators battled in court and amendments were made to Uber’s safety protocols to continue its operations in the city.

This time, however, Uber has renewed the license without facing any regulatory bottlenecks.

Happy with the win, Jamie Heywood, Uber’s Regional General Manager for Northern and Eastern Europe, said, “TfL rightly holds our industry to the highest regulatory and safety standards and we are pleased to have met their high bar.”

Analysts’ View

After Uber won the NYC yellow taxis deal, Mizuho Securities analyst James Lee reiterated a Buy rating on the stock with a price target of $72, which implies a whopping 111.4% upside potential to current levels.

Lee views the deal as a leading indicator that other U.S. cities too, will become “more accommodating” towards such services.  

“We believe this benefits Uber because it resolves the driver supply shortage that caused the company to increase driver incentives in the past. At the same time, driver supply from taxis should enable Uber to balance the supply/ demand of its marketplace and avoid surge charges that make the ride-hailing less competitive than taxis during the peak time,” Lee noted.

Overall, the UBER stock commands a Strong Buy consensus rating based on 25 Buys and one Hold. The average Uber price target of $60.48 implies 77.6% upside potential to current levels.

News Sentiment

TipRanks data shows that the News Score for Uber is currently Very Positive based on 78 articles published over the past seven days. Notably, none of the articles have a Bearish Sentiment compared to a sector average of 36%, while 100% of the articles have a Bullish Sentiment compared to a sector average of 64%.

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