As California’s AB5 Becomes Law, Uber’s Path to Profitability Just Got More Complicated

Uber Technologies (NYSE: UBER) was one of the most anticipated IPOs of last year. Many investors felt that the company's strong position in the ride-hailing industry would turn into meaningful returns on the stock market. However, things haven't gone that way, at least not yet. At writing, Uber's stock is down by 18% from its $45 IPO price. One reason behind this lackluster performance has been the red ink on Uber's bottom line.

Although few people expected the ridesharing giant to turn a profit in its first year as a publicly traded company, the pace at which Uber has been losing money is dizzying. During the third quarter, Uber's net loss was $1.2 billion, and that was significantly better than the company's $5.2 billion net loss recorded during the second quarter. Unfortunately for Uber, a new California law dubbed AB5 makes it harder for the company to classify its drivers as independent contractors, and its road to profitability isn't getting any easier.

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Source Fool.com