Lyft Stock Falls, Derailed by Margin Misstatement

In a whirlwind of market activity, Lyft shares experienced a tumultuous ride on Tuesday evening, initially skyrocketing after the company’s earnings release, only to plummet back down following a major error correction acknowledged by its Chief Financial Officer during the earnings call.

According to LSEG, formerly known as Refinitiv, Lyft’s earnings per share surpassed analyst expectations, coming in at 18 cents adjusted compared to the anticipated 8 cents. Similarly, revenue met estimates, totalling $1.22 billion. However, CFO Erin Brewer revealed a significant discrepancy in the press release regarding margin expansion. Initially stated as 500 basis points (5%), the actual increase for 2024 will be 50 basis points (0.5%).

“This is actually a correction for the press release,” Brewer clarified.

Despite the error correction, Lyft’s stock initially surged by over 60% in extended trading, eventually settling with a 16% increase. However, this rapid ascent was swiftly followed by a sharp decline, resulting in a market cap decline of well over $2 billion. This rollercoaster movement starkly contrasts with the company’s valuation, which closed the day valued at less than $5 billion.

Lyft reported a 4% revenue increase from the previous year, reaching $1.22 billion. Additionally, the company anticipates gross bookings for the first quarter to exceed analysts’ estimates, ranging from $3.5 billion to $3.6 billion.

Lyft CEO David Risher highlighted positive performance metrics, including a record number of annual riders and a 26% increase in rides from the previous year. Despite these achievements, Lyft has grappled with challenges since its 2019 initial public offering, facing intense competition from larger rival Uber and struggling with cash outflows to support drivers.

The fluctuating trajectory of Lyft’s stock reflects broader uncertainties in the ride-hailing industry, as companies navigate financial performance and market expectations amid evolving consumer behaviours and competitive pressures.

Pan Finance is a print journal and news website providing worldwide intelligence on finance, economics and global commerce. Known for our in-depth analysis and opinion pieces from esteemed academics and celebrated professionals; our readership consists of senior decision makers from across the globe.

Contact us