If you were listening to the PreMarket Prep Show live on Thursday, you were treated to instantaneous coverage of breaking news from Uber Technologies (NASDAQ: NYSE:UBER).
The News: Just after 8 a.m., Uber announced it reached a deal to list all New York city taxis on its application. The new deal could help the ride-hailing giant better manage its driver shortage while reducing high fees on the platform.
PreMarket Prep Take On Early Price Action: Co-host Dennis Dick's immediate response was: “Enemies become friends.”
He noted that the initial rally off the news was already beginning to fade. He also reviewed the initial reaction in shares of Lyft Inc. (NYSE: NASDAQ:LYFT), its main competitor, and noted an initial spike lower but was beginning to recover.
Dick also discussed the impact the news was going to have on pair traders of the issue as they usually move in tandem and not opposite directions.
Another lesser-known issue that may be positively impacted by the news was Medallion Financial Corp (NASDAQ: MFIN). The reason is the company originates and services loans in various industries (which includes NYC cab drivers), and its wholly-owned subsidiary, Medallion Bank, also originates and services consumer loans.
Regular Session Price Action For Uber: Dick’s mention of the pop and drop in Uber had relevance in the regular session. In fact, a much higher open ($34.74 vs. $33.06) attracted more sellers. The issue rallied another 21 cents to $34.95 and reversed course.
As of 12:15 p.m., the ensuing decline found support just under the top of Wednesday's range ($33.68), reaching $33.44. It's now moving back towards the high for the session
Regular Session Price Action For Lyft: Despite the possible bad news for the company, it opened flat. It went on to breach the pair of high from Tuesday ($38.61) and Wednesday ($38.81) and reversed course.
The ensuing decline when beyond Wednesday's low ($37.53), reaching $37.12 but rebounded back to the high for the session.
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