Hey Snackers,
Another day, another “Election” Google search every 5 minutes mid-Zoom call.
Stocks closed higher yesterday, even as election results remained unclear. The tech-heavy Nasdaq index was the biggest gainer, popping nearly 4%. We'll dig into why below.
Deliver
Uber, Lyft, and DoorDash score a gigantic win as CA voters save the gig economy
Saved by the ballot... App-based driving companies are majorly relieved after CA voters said "Yes" to Prop 22. That exempts them from CA's AB5 law, which would've forced them to reclassify gig drivers as employees (think: healthcare, PTO, paid sick leave).
- "The Ride Scare"... In August, Uber and Lyft said they'd shut down in CA because it was forcing them to follow AB5 (cue: panic). Hours before the shutdown, regulators said they could wait until the Prop 22 vote.
- $200M and 200M emails later... Uber, Lyft, DoorDash, Postmates, and Instacart spent $200M to support the Prop (and spammed us with notifications). It was the most expensive campaign for any ballot measure in CA history.
Deliver the deets... This law would've made hiring drivers more expensive, making these chronically unprofitable apps even more unprofitable. Now they'll save billions of $$$ in a key market. Uber and Lyft shares soared more than 10% yesterday.
- Drivers get: New benefits like health insurance if you work 15 hours or more per week and at least 120% of minimum wage. They also retain flexibility to work when they want.
- Riders avoid: Up to 2X price increases and fewer available drivers. Uber would likely have dramatically reduced drivers if the Prop failed.
It's a massive blow to AB5... Gig companies were the main target of this law. Now that they're exempt, that just leaves other independent contractors like freelancers. But AB5 has caused some companies to stop hiring CA freelancers to avoid paying them as employees. Vox cut 200 freelance writers to comply with AB5. That's why CA has been handing out exemptions and loosening requirements.
Track
Stocks react to election results: we break down sector moves, from Big Tech to pot
2,000 years later... (in SpongeBob voice). As Americans watched election results slowly trickle in yesterday, only one thing seemed clear: the likelihood of a divided Congress (the sequel). This Democrat-controlled House and Republican-controlled Senate excited one sector: Big Tech.
- A divided Congress makes it harder to pass legislation against tech giants. Both sides have major beef with Big Tech, but their grievances are different (sometimes, opposite).
- A Blue Wave in Congress could've brought big changes to Big Tech. That doesn't seem to be happening, reducing the chance of major reform.
- So investors boosted Big Tech. The Nasdaq surged yesterday as Facebook stock jumped 8% and Google and Amazon spiked 6%.
Big Gambling... also made some election-related moves. Voters in Maryland, Louisiana, and South Dakota said "Yes" to legalized sports betting, sending DraftKings and Penn National Gaming shares up over 5%. Also making waves:
- Big Weed: Arizona, New Jersey, Montana, and South Dakota voted to legalize recreational marijuana. Oregon took it a step further, becoming the 1st to legalize magic shrooms for medical treatment.
- Buuut... Big Pot stocks Canopy, Aurora, and Tilray actually dropped because they want legalization at the federal level. A Republican Senate makes that unlikely.
The 1st reaction isn’t always the long-term one... Stocks react to news all the time — but long-term, there's a lot we still don't know. For example, it's possible that a divided House could pass laws that significantly hurt Big Tech — or green light weed.
What else we’re Snackin’
- Biscuit: Wendy's nabbed new breakfast goers last quarter, even as other fast-food chains lost to cereal.
- Vacay: Expedia's earnings weren't as bad as expected thanks to an uptick in summer travel — but sales were still down 58%.
- Pixel: Comcast and Walmart are reportedly in talks to develop Smart TVs that include Comcast's software and streaming services.
- Ballot: CA voters rejected Prop 16, which would've allowed affirmative action for public universities and government hiring/contracts.
- Bimmer: BMW saw strong growth in profits and sales thanks to the pandemic recovery in China, where sales rose 31%.
- Treat: Biogen stock soared 44% after FDA staff said it had enough data to approve its experimental Alzheimer’s drug.
🍪 Thanks for Snacking with us! Want to share the Snacks? Invite your friends to sign up here.
Thursday
- Weekly jobless claims
- Earnings expected from Uber, General Motors, Zillow, and Match Group
Disclosure: Authors of this Snacks own shares of Uber, Walmart, Google, and Amazon
ID: 1400274
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