Uber’s market cap surpasses its IPO valuation —

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Who’s winning election week in the United States? Uber.

First, on Nov. 3, voters in California agreed to exempt gig companies from a new state labor law that would have upended Uber’s business model. And now the company’s market capitalization has reached $78 billion, surpassing the $75 billion valuation when the company went public in May 2019, according to PitchBook data.

Shares of the ride-hailing giant are currently up 7% to $45.11 a share, topping the company’s initial public offering price of $45.

Though you still would have been better off in the S&P 500 index if measuring from the IPO date, Uber’s stock is now up 49% year-to-date while the S&P 500 is up 17%.

In a sense, the rebound is a validation of Uber’s decision to go public, even though it continues to set large losses. In the third quarter, the company had a loss of $1.09 billion, which was narrower than the $1.16 billion it lost in the same quarter last year.

In the middle of a pandemic, the company has been propped up by delivery and its Uber Eats business, as its main business—ride-hailing—remains weak. On a Nov. 5 call with analysts, Uber’s chief financial officer Nelson Chai said, “We run the largest food delivery company outside of China.”

Importantly for Uber, it can do that on its own terms in California, where voters overwhelmingly approved Proposition 22, a ballot initiative that will keep the app-based economy’s drivers and delivery workers classified as independent contractors and not employees. Essentially, gig companies like Uber, Lyft, DoorDash, and Instacart won an exemption from having to start paying into benefits like worker compensation and health insurance.

The Prop 22 outcome could set a precedent for how other lawmakers across the United States approach the worker-classification debate. On the call with investors yesterday, Uber CEO Dara Khosrowshahi said that “going forward, you’ll see us more loudly advocate for new laws like Prop 22… It’s a priority for us to work with governments across the US and the world to make this a reality.”

“The news of Prop 22 passing earlier this week remains front and center for the Street and has removed one of the biggest overhangs over the stock,” Wedbush analyst Daniel Ives said in a Nov. 6 note to clients.

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