Uber shares have taken a U-turn this week.
The stock rallied more than 11% on Tuesday for its best day since November. The jump came after Uber upped its third-quarter outlook forecast and projected a path to profitability. It marks a sharp reversal from its 11% decline this quarter.
But Gina Sanchez, CEO of Chantico Global and chief market strategist at Lido Advisors, warned that Uber isn't in the clear yet as labor remains a wild card for the company.
"They are still battling their whole business model, which depends on them being able to classify their drivers as contractors and in California, it seemed like they were going to win with Prop 22, and they just recently had a significant setback. And I think that that story isn't over, which tells me that their business model to some degree remains at risk," Sanchez told CNBC's "Trading Nation" on Tuesday.
A California court ruled in late August that Prop 22 was unconstitutional. The ballot measure, which classifies gig workers as independent contractors, had passed last year.
"They may be able to plot a path to profitability here, but what happens when or if they have to start treating their drivers like employees?" Sanchez said. "Their crossing into profitability is a good thing. However, it's not necessarily a sustainable thing, not yet."
CNBC reached out to Uber for comment.
New Street Advisors founder Delano Saporu sees pluses and minuses for Uber and main competitor Lyft.
"On the positive side, you're seeing both of these companies kind of revise upward, they're looking at bookings being stronger … and they're actually showing that they're getting to profitability as well," Saporu said during the same interview.
Both Uber and Lyft are forecast to post net losses in fiscal 2021 at a fraction of last year's losses. They are next expected to report quarterly results in November.
"Uber has an advantage where they have a little bit more cash flow to kind of invest in more mobility apps in different areas," Saporu said. "I have a little bit of exposure to Lyft, but I still think in the short term it will be a bumpy ride for both these companies."