On the worst day on Wall Street since last March, shares of rideshare service Lyft blew up briefly in after-hours trading after the company posted erroneous earnings projections in an earnings press release that sent investors into a frenzy.
Shares of Lyft were up 63% at one point in the post-market, spiking from a $12.13 per share at market close (a 2% drop) to just shy of $20, an area it hasn’t been close to since May 2022. That surge came after the company said in an earnings release that it expected “adjusted EBITDA margin expansion (calculated as a percentage of gross bookings) of approximately 500 basis points year-over-year.”
That’s a stratospheric jump. Unfortunately, it was based on a typo. The company’s chief financial officer had to issue a correction a short while later on the earnings call, saying the expected expansion was 50 basis points.
And just as quickly as shares shot up, they began to decline. By 6 p.m. ET, the stock saw after-market gains of more than 18%, a number that’s still impressive, but is a bit harder for investors to appreciate after the earlier jump.
The investor enthusiasm followed Lyft’s announcement of a 14% increase in gross bookings in 2023, with revenues of $4.4 billion, an 8% increase. The company’s earnings projection for the first quarter of 2024 also raised eyebrows. Lyft now says adjusted earnings before interest, taxes, depreciation, and amortization will come in between $50 million and $55 million.
Gross bookings for the first quarter are projected to be between $3.5 billion and $3.6 billion, topping analyst estimates of $3.46 billion. And, on top of this, the company now says it expects to be cash-flow positive for the first time in 2024.
“Lyft’s outstanding Q4 performance demonstrates our team’s incredible work to build a solid foundation for profitable growth,” said CFO Erin Brewer in a statement. “We’ve entered 2024 with a lot of momentum and a clear focus on operational excellence, which positions the company to drive meaningful margin expansion and our first full-year of positive free cash flow.”
That’s music to investors’ ears. Since its public offering in 2019, Lyft has lost money, which has kept its stock price muted. Arch-rival Uber, meanwhile, has grown—and grown profitable. Last week, Uber reported 2023 was its first year as a profitable company as bookings were up 24% in the just-completed quarter.
The two companies continue to battle for drivers and customers. And Uber has a big head start, holding about 70% of the U.S. rideshare market, according to market research firm YipitData. Lyft, though, said it expects ride growth to rise in the mid-teen percent range this year.
The earnings follow mass layoffs at Lyft last year. The company cut over 1,000 jobs in April.
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