Lyft Stock Initially Soars 66% on Earnings Typo, Corrected Increase Now at 16% Above Closing Price
Lyft witnessed a significant surge in its shares, spiking up to 66% in after-hours trading on Tuesday, driven by a typo in its latest earnings report that suggested a substantial increase in one measure of the company’s profitability for the year. However, the stock has since stabilized, hovering around 16% above its closing price, following Lyft’s revelation that the initially reported increase was exaggerated by a factor of 10.
Key Facts:
- Lyft’s closing price settled at $12.12 per share but experienced a surge to $20.04 around 4:40 p.m. ET. Traders believed Lyft’s adjusted EBITDA margin as a percentage of bookings could expand by 500 basis points (equivalent to 5%) in 2024.
- The actual forecast indicates a more modest expansion of 50 basis points or 0.5%, as clarified in Lyft’s fourth-quarter earnings report.
- The typo was acknowledged by Lyft’s Chief Financial Officer during an earnings call with analysts, leading to the stock falling to just over $14 per share, representing a $2 increase from its closing price.
- Despite the typo incident, Lyft’s earnings report overall showed positive results, with $1.2 billion in revenue, reflecting a 4% year-over-year increase.
Key Background:
- While Lyft has not achieved profitability yet, its recent earnings reports demonstrate efforts to reduce losses. In the fourth quarter, Lyft reported a net loss of $26.3 million, a significant improvement from the $588 million in net losses during the same period in 2022. The company also narrowed net losses to $340.3 million in 2023 compared to $1.6 billion in 2022. Lyft anticipates gross bookings to reach up to $3.6 billion in the first quarter, surpassing analysts’ expectations. The company expressed optimism about generating positive free cash flow in 2024, marking a significant milestone.
Tangent:
- Last week, Lyft’s main competitor, Uber, announced its first profitable year since going public.