Shares of Uber (UBER) and Lyft (LYFT) are on the rise in Tuesday afternoon trading as California voters make their decision on whether to pass Proposition 22, which would allow the ride-sharing companies to keep their current business model. Citing a recent survey of California based consumers, MKM Partners analyst Rohit Kulkarni recently said he is "tactically positive" on both Uber and Lyft as the results point toward "fairly high" awareness of Proposition 22 and an increasingly favorable opinion on the ballot measure.

PROPOSITION 22: Proposition 22 would exempt ride-sharing and delivery companies from a new California law that forces such companies to reclassify their workers as employees rather than contractors and offer benefits such as unemployment protection. If it passes, Proposition 22 would also undermine the lawsuit against Uber and Lyft. California has brought the suit against both companies for allegedly violating the new law. Almost entirely funded by gig-economy giants, the campaign in support of Proposition 22, also known as "App-based drivers as contractors and labor policies initiative," has spent over $200M, while opponents of the measure have spent about $14M to defeat it, making it the most expensive ballot race in the state.

At the Wall Street Journal's annual Tech Live conference last month, Uber CEO Dara Khosrowshahi mused over the options the ride-hailing giant has in California if voters shoot down the ballot measure, which "would prevent the ride-hailing company's drivers from being classified as employees," wrote the Wall Street Journal's Preetika Rana. "We are looking at all our options. We will do our best to operate in California...Where in California we will operate is a question mark, and the size and scale of business will be a big question mark," the CEO said.

SURVEY SAYS: Along with his firm's Quantitative Survey Group, MKM Partners analyst Rohit Kulkarni finished the second iteration of a survey of California based consumers to gauge their awareness and likelihood to support Proposition 22 in Tuesday's election. The headline takeaway, Kulkarni said, is that his proprietary voter survey results are "encouraging" for Uber and Lyft. Awareness of Prop 22 among voters is fairly high and has increased from 78% of surveyed voters in the firm's first survey to 89% in the firm's second survey. Further, favorable opinion for Prop 22 has increased as well – from 47% to 59% of surveyed voters planning to vote in favor of this initiative, the analyst added. Based on his survey and recent stock trends, Kulkarni is "tactically positive" on both Uber and Lyft, the analyst said in a note to investors this Monday. Given Lyft's exposure to California trends, he thinks Lyft has "more to lose and more to gain" from a Proposition 22 decision.

PRICE ACTION: In Tuesday afternoon trading, shares of Uber have gained over 3% to $35.86, while Lyft's stock has advanced about 6% to $25.95.