Why not? The subdivisions of California are creatures of state law, either statutory or constitutional. An initiative can modify statues or the constitution. There are three limitations on them (Art. II, section 8, (d), (e), and (f)) but I don't see how any of them would apply here.
Do you see a federal constitutional or statutory doctrine that would prevent it from doing so?
But seriously, yes, statute law or the state Constitution can be modified by initiative. The latter requires more qualifying signatures than the former, but once it's on the ballot, simple majority is all it takes.
But the status of cities also involves the city's charter (not all cities are charter cities, but most major ones are).
I live all the way on the other side of the country. I don't have a dog in the fight. I just suggested that the Bay Area could be reorganized into a single municipality through the initiative process if the voters of California decided to do that.
Whether or not you could actually get the votes is something I'm not equipped to answer. A big part of it would depend on what people in Southern California think of the idea given that it contains over half the state's population.
Los Angeles is the result of the process people here are advocating and it is considered a civic disaster...so much so that it has had to yield to secession efforts in the entire years. Surprise, people don't want to have their mayor live 80 miles away.
Few in California would vote to create a second Los Angeles.