Uber and Lyft share near record levels as investor skepticism grows

Shares of Uber and Lyft fell to a healthy low on Tuesday, leaving their lowest ever, as companies with growing skepticism face growing investor skepticism.

Uber dropped 5.7% to $ 30.70, falling below the previous low of $ 32.57 on August 30. Earlier in the day, the stock hit an intraday low of $ 30.67.

Lyft experienced a similarly steep decline, ending the day down 7.2% to $ 45.42, compared to the previous lowest $ 48.1[ads1]5 on May 13. The stock fell as low as $ 45.40 on Tuesday, touching a new intraday low.

Both companies have had a particularly tough turn on the public markets since their respective IPOs earlier this year, as investors continue to question whether Uber or Lyft can achieve profitability in the future. On Tuesday, Uber and Lyft traded more than 30% below the stock quotes of $ 45 and $ 72 per share, respectively.

Uber reported a net loss of $ 5.24 billion for its second quarter of 2019, owing to share-based compensation costs. In comparison, Lyft lost $ 644.2 million in the second quarter, representing a significant jump from the $ 178.9 million it lost the year before.

A proposed California law could also represent a major threat to Uber and Lyft's business models if it were to pass through the state Senate, as it would force companies to classify their drivers as employees. The bill passed the California Assembly in May, and California Gavin Newsom voiced his support for the bill Tuesday. Meanwhile, Uber and Lyft have pledged $ 60 million to a ballot box to retain the drivers' classification as entrepreneurs.

Lyft and Uber's management have tried to calm investors' concerns about their businesses by drawing a path to profitability. Brian Roberts, chief financial officer at Lyft, said he believed the company's top loss was last year, while Uber CEO Dara Khosrowshahi characterized the loss in the second quarter as a "once-in-a-lifetime hit."

This effort has swayed some Wall Street analysts who say the price war between tourism companies has eased, indicating that Uber and Lyft could make a profit in the near future. In a research note on August 27, Ronald Josey, an Internet analyst at JMP Securities, said data from a recent survey found that many riders did not compare prices between the two services, "which highlights demand inelasticity." Josey has a Market Outperform rating on both Uber and Lyft.

"With fewer users comparing prices between services when equestrian services compete for brand and product, we believe pricing can continue to be rational," Josey said.