Lyft erases losses, swings 10% higher after court issues emergency stay for driver classification order
- Lyft erased massive losses and gained as much as 10% on Thursday after the company was granted an emergency stay on a California court injunction.
- The California court ordered Lyft and rival firm Uber last week to reclassify drivers as employees. Lyft's Thursday announcement came after the court initially said its injunction would take effect on Friday.
- Lyft stock tanked earlier in the session after the company said it would suspend service in California starting at midnight.
- Both rideshare companies previously threatened to suspend operations in the state should the injunction take effect.
- Watch Lyft trade live here.
Lyft stock retraced a 9% loss and gained as much as 10% on Thursday after a California court granted an emergency stay on an order to reclassify drivers as employees.
The rideshare giant's shares tanked earlier in the session after Lyft announced it would suspend service in California due to the court injunction. The court's latest move allows Lyft and Uber to continue operations in the state for the time being.
The injunction is related to a state lawsuit against Uber and Lyft for their driver classifications. California's attorney general and three city attorneys claim the companies avoided costs by classifying workers as contractors and not employees.
Both Uber and Lyft threatened previously threatened to shut down California operations if the court ruled against them, saying such a move would be too costly.
"We want to be in California, but if the court case comes in then we'll have to shut down," Uber CEO Dara Khosrowshahi said at an August 13 event. "We've got the best engineers in the world figuring out how we can rebuild this thing."
The order was first stayed last week for 10 days while both companies appealed the ruling. Thursday afternoon's emergency stay prompted Lyft to recall its suspension plans. It's not yet clear how long the emergency stay will last.
Uber hadn't announced a suspension before the emergency stay was granted.
The slump temporarily placed Lyft shares at their lowest level since early May. The court's last-minute change pushed shares to their highest since mid-August.
Uber stock gained as much as 7.7% Thursday afternoon.
A more permanent aid for the rideshare companies could arrive before the year is out. State legislation set to be voted on in November could allow for gig-economy firms to pool cash for benefits typically reserved for full-time employees.
Lyft traded at $29.97 per share as of 1:05 p.m. ET Thursday, down 38% year-to-date.
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