Uber Technologies stock fell early Thursday, after Elon Musk talked up plans for a Tesla ride-hailing service on the company's earnings call late Wednesday. The call reignited investor concerns about Tesla's threat to Uber and Lyft.
Musk, Tesla's Chief Executive, told analysts Wednesday that Tesla "expect(s) to roll out ride-hailing in California and Texas next year to the public."
The company has already built an app for ride-hailing that it is testing with employees. California will have a longer regulatory approval process, Musk added, while Texas could launch sooner.
"And then – and maybe some other states actually next year as well, but at least California and Texas," Musk said. "I think that would be very exciting. That's really a profound change. Tesla becomes more than a sort of vehicle and a battery manufacturing company at that point."
On the stock market today, Uber stock fell nearly 2% to close at 78.39. Lyft stock traded lower early Thursday but bounced back to close up a fraction at 13.78.
Uber Stock: Tesla's Overhang
The possibility that Tesla could launch an Uber competitor has weighed on Uber's and Lyft's shares since Musk teased an announced in the spring. Tesla revealed its CyberCab at an Oct. 10 event but ride-hailing was hardly mentioned. Uber stock surged 11% the day after the event, which one analyst called "toothless."
But Tesla apparently saved its "ride-hailing rollout surprise" for its earnings call yesterday, RBC Capital analyst Brad Erickson said in a client note.
"Setting the odds of Tesla achieving its usual ambitious timelines aside, the key question comes down to how they'll price it and how many cars they can get on the road in aspiring to stand up a reliable service," Erickson wrote. "Bigger picture, we are confident in Uber's (and eventually Lyft's) tech-agnostic approach being a better mousetrap than one company going against the rest of the world with a captive network, as it should allow for the best supply along with immediate capacity utilization."
Uber Partnering With AV Providers
Uber, meanwhile, has pitched its app as a way for autonomous vehicle developers to find demand for their products. The ride-hailing giant has partnerships with Google's Waymo, GM's Cruise and Avride, among others, to place autonomous vehicles on the Uber app.
But Tesla appears focused on building its own ride-hail network. Musk has previously described the effort as an Airbnb and Uber hybrid. Tesla owners could place their cars on a ride-hailing app run by Tesla using the vehicle's so-called Full Self-Driving technology.
There are still several challenges ahead, however. The National Highway Traffic Safety Administration last week opened a preliminary investigation into Tesla's Full Self-Driving technology after reports of four collisions, including one fatal accident.
Uber, meanwhile, will report third quarter earnings before the market open on Oct. 31.
Uber stock broke out beyond an 82.14 buy point following Tesla's robotaxi event on Oct. 11. Shares closed Wednesday just below the consolidation pattern buy point. Thursday's action pushed Uber stock below its 21-day moving average.
