Uber suffered a blow on Friday after the UK’s Supreme Court ruled that a group of the ride-hailing company’s drivers are entitled to worker rights, including minimum wage, Reuters reported.
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According to the Reuters report, a total of 25 Uber (UBER) drivers were part of the case and Uber said the verdict did not apply to all of its current 60,000 drivers in Britain, including 45,000 in London. Currently, these drivers are considered as self-employed. As a result, they are entitled to only minimal protections by law in the UK – a status that Uber sought to maintain in the legal tussle.
Reuters cited UK Supreme Court Judge George Leggatt, “The Supreme Court unanimously dismisses Uber’s appeal. The legislation is intended to give certain protections to vulnerable individuals who have little or no say over their pay and working conditions.”
Uber’s Northern and Eastern Europe head Jamie Heywood was quoted by Reuters, “We respect the Court’s decision which focused on a small number of drivers who used the Uber app in 2016. We are committed to doing more and will now consult with every active driver across the UK to understand the changes they want to see.” (See Uber stock analysis on TipRanks)
Shares of Uber fell by 1% and closed at $58.39 on Feb. 19.
Wedbush analyst Daniel Ives reiterated a Buy rating and a price target of $76 (30% upside potential) on the stock. Following UK’s Supreme Court ruling, Ives commented in a note to investors, “With London one of Uber’s Top 5 markets globally this ruling clearly could change this market depending on the ripple impact for the company as the employee route (minimum wage, paid time off and vacations) revives a nightmare for Uber and the overall Gig Economy…”
“For Uber heading into a ridesharing rebound, the company needs to carefully balance how they navigate this latest legal challenge to the worker vs. contractor debate which remains a lingering overhang globally…We believe this UK ruling is a contained risk at this point for Uber and the overall Gig Economy, with the city of London and Uber having many battles throughout the past few years (licenses, etc) with this the latest issue,” Ives added.
Overall, analysts are bullish on the stock with a Strong Buy consensus rating. This is based on 26 analysts recommending a Buy and 3 analysts suggesting a Hold. The average analyst price target of $71.46 implies 22.4% upside potential to current levels.
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