Dara Khosrowshahi, CEO of Uber Technologies Inc., listens during a panel discussion at Bloomberg Global Business Forum in New York, USA, on Wednesday, September 26, 2018.
Mark Causlarich | Bloomberg | Getty Images
Uber and Lyft shares fell to their lowest levels on Tuesday, posting their lowest close so far as drift companies face increasing investor skepticism. as low as $ 32.57 on August 30. Earlier in the day, the stock hit a low of $ 30.67 during the day.
Lyft experienced a similar sharp decline, ending the day down 7.2% to $ 45.42, down from its previous low of $ 48.1
Both companies have been particularly rude in the public markets since their respective IPOs earlier this year as investors continue to wonder whether Uber or Lyft can achieve profitability in the future. Uber and Lyft traded more than 30% below their IPO prices of $ 45 and $ 72 a share on Tuesday, respectively.
Uber reported a net loss of $ 5.24 billion in its second quarter of 2019, blaming share-based compensation costs. By comparison, Lyft lost $ 644.2 million in the second quarter, a significant jump from the $ 178.9 million it lost a year earlier.
The proposed California law could also pose a major threat to Uber and Lyft's business models if it passes through the U.S. Senate, as it will force companies to reclassify their drivers as employees. The bill was passed by the California Assembly in May, and California Gov. Newsome expressed support for the bill Tuesday. In the meantime, Uber and Lyft have pledged $ 60 million to vote, which would keep the drivers ranked as contractors.
Lyft and Uber executives have tried to address investors' concerns about their business by charting the path to profitability. Brian Roberts, Lyft's CEO, said he believed the company had peak losses last year, while Uber CEO Dara Hosrovshahi described the second-quarter loss as a once-in-a-lifetime hit.
These efforts have angered some Wall Street analysts, who argue that the price war between ride-hailing companies has decreased, suggesting that Uber and Lyft may make a profit in the near future. In a research note on Aug. 27, Ronald Josie, an Internet analyst at JMP Securities, said recent survey data found that many riders were not comparing prices between the two services, "emphasizing demand inelasticity." Josie has an Uber and Lyft rating.
"With fewer consumer price comparisons between services, as ride-sharing services compete by brand and product, we think pricing can continue to be rational," says Josie.