Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Shares of Lyft soared more than 60 per cent on Tuesday before falling back sharply, after an error in the ride-hailing company’s quarterly earnings release exaggerated the outlook for margin growth in 2024 by 10 times.
The taxi app reported that it would improve adjusted earnings margins by 500 basis points, or 5 per cent, in 2024 compared to the previous year. Lyft stock surged in the minutes after the announcement to as much as $19.70, the highest price since August 2022.
Lyft shares then retreated to a gain of about 15 per cent after chief financial officer Erin Brewer said on a call with investors and analysts that the increase would in fact be 50bp, or 0.5 per cent. “This is actually a correction from the press release,” Brewer said.
The error adds to years of woes for Lyft’s shares, which have lost about 80 per cent of their value since its initial public offering in 2019. The erroneously strong prediction was taken as a sign by investors that the company’s efforts to challenge much-larger rival Uber under chief executive officer David Risher, who took over less than a year ago, had started to pay off.
The company has invested millions of dollars to attract new drivers to its platform but has failed to significantly narrow the gap with Uber on the number of users. Lyft’s gross bookings increased by 17 per cent to $3.7bn in the quarter compared to a year earlier, according to its latest earnings.
It reported adjusted earnings of 18 cents a share in the quarter, more than the 8 cents a share analysts had forecast. Revenue of $1.2bn aligned with analyst expectations. Net losses narrowed to $26.3mn.
For the first quarter of 2024, Lyft forecast gross bookings in the range of $3.5bn-$3.6bn and adjusted earnings before interest, taxes, depreciation and amortisation of between $50mn-$55mn.
Lyft said it expected to generate full-year positive free cash flow for the first time in 2024.
Risher said: “In 2023, the Lyft team set ambitious goals and the results speak for themselves. We reached the highest level of annual riders in our history, delivered over 700mn rides, and helped drivers take home over $8bn . . . In 2024, we’ll prove that Lyft’s customer obsession will drive profitable growth.”
Uber last week cheered investors after reporting its first-ever annual profit. It said gross bookings in the final quarter of 2023 had increased 22 per cent to $37.6bn compared to the previous year.