Uber’s mission to bring efficiency to transport has been dealt yet another blow. For the second time in two years, Uber (NYSE: UBER) was denied a full operational license to provide a ride-sharing service to customers in the metropolitan area of London. The company had been on a two-month probationary period, which itself was an extension of a 15-month provisional license granted in 2015.
The decision comes at a time when ride-hailing companies such as Uber and rivals Lyft (NASDAQ: LYFT) are failing to come up with viable, profit-making business models.
Uber’s race-to-zero with competitors in transport has been hurt by London’s governing transport body, Transport for London (TfL). TfL deemed the company to have put the safety of customers at risk following a failure to address issues regarding the authenticity of Uber driver accounts.
TfL went further to say that it had “identified a pattern of failures by the company including several breaches that placed passengers and their safety at risk” and that a number of trips had been uninsured. Such events will not contribute to the rebuilding of Uber’s damaged image, as the company’s questionable practices regarding the mistreatment of drivers have been well highlighted in recent months.
How does this affect Uber stock?
Uber’s stock price tanked more than 6% in pre-market trading yesterday but recovered more than 4% of this by market-close. The news is just the latest in a long line of dismal stock performances by the company, since Uber’s IPO in May.
Uber can continue to operate within London city pending an appeal, but if the license to operate is lost for good, it will be dealt a catastrophic blow to its European theatre of operations.
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Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.