Ride-sharing app company Uber has been told by the local transport regulator that its license to operate in London will not be renewed. Local regulator Transport for London (TfL) says a pattern of failures which placed passenger safety and security at significant risk was behind the decision. The company has three weeks to appeal the decision.
In its response, Uber says the decision by the TfL to suspend further renewals of its license was “extraordinary and wrong”, saying that it intends to appeal the decision. The company further said in a statement that it had made fundamental changes to its business model in the last two years and was setting standards on safety.
Uber’s London platform has about 45,000 registered drivers, who provide ride-hailing services to more than 3 million users. Uber’s London operations is the company’s biggest market outside of the US. However, the company has repeatedly found itself on the wrong side of TfL’s regulations in the tightly regulated London taxi industry. The TfL had suspended Uber’s license in 2017, and says that Uber’s identification systems allowed unauthorized drivers to use their photos on other registered drivers’ profiles, enabling them take rides as if they were the originally booked drivers in at least 14,000 trips.
Uber’s shares were down by 5% in pre-market trading on the news, even as Mayor of London Sadiq Khan put out a statement backing the TfL’s decision.
A loss of the London market will be a huge financial blow to the company and will have a knock-on effect on employment of the 45,000 drivers on its platform. This has already been made known by investors in the market, with Uber’s stocks declining from 30.15 to 29.27 in pre-market trading for Monday (as at the time of writing).
I expect Uber’s stocks to continue the downward slide when the US markets open today. Downward moves would target the previous double bottom seen on October 9 and 20 at 28.33. This is also the previous high of November 20. Below this area, the previous high of 27.57 (seen on November 12) remains a potential further downside target.
To the upside, resistance is seen at today’s intraday high at 30.15, which is also the previous low of 27 September and 4 November. Further up, the 30.66 price level remains another solid resistance (previous double bottom neckline as well as previous lows of September 3 and November 4). These are the price areas that constitute the upside targets if Uber’s price recovers.