Uber And Lyft Shares Are Falling Wednesday: What's Going On?

Uber Technologies Inc. UBER and Lyft Inc. LYFT shares are trading lower Wednesday following General Motors' announcement that it is winding down its Cruise Robotaxi division. Here’s what you need to know.

What To Know: Analysts at Bernstein expressed concerns over the implications for rideshare companies like Uber and Lyft, suggesting the news negatively impacts the broader autonomous vehicle (AV) market.

Daniel Roeska stated that GM's decision to integrate Cruise’s technology into its personal vehicle systems, such as Super Cruise, casts uncertainty over Uber's previously announced AV partnership with Cruise. He noted that the move shifts the financial burden of AV development onto Uber if the company wishes to continue pursuing similar technology, which he described as "an unrealistic and undesirable scenario" for Uber at this stage.

Nikhil Devnani added that GM's exit from the robotaxi business raises doubts about the scalability and economic viability of AV technology. He said that GM's decision highlights the challenges of operating and maintaining robotaxi fleets, as well as the significant capital required to scale such networks.

Both analysts emphasized that the winding down of Cruise disrupts the AV partnership ecosystem, consolidating the market further. Companies like Waymo and Tesla, which continue to scale despite high costs, now face less competition. Devnani said the news creates uncertainty for Uber's AV ambitions, which is likely contributing to the stock’s sharp decline.

The sell-off reflects investor concerns about Uber's potential exposure to the risks and costs of autonomous technology development in the wake of GM's decision. Lyft Inc. shares are also under pressure for similar reasons.

Price Action: Uber shares were down 4.43% at $62.09 and Lyft shares were down 3.97% at $15.55 at the time of writing, according to Benzinga Pro.

Image Via Shutterstock.