Uber drops as London bans app
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