Tension and excitement dominated the world of Lyft investors on Tuesday night. A simple typo in the business forecast caused an unprecedented roller coaster ride for the shares of the Uber competitor, initially surging over 60 percent after the US market closed and then plummeting rapidly as the outlook was corrected.
Nonetheless, the Lyft stock was able to record a 15.91 percent increase to $14.06 USD after-hours on NASDAQ. It also looked promising at the opening of trading on Wednesday, with a pre-market rise of 16.57 percent to $14.14 USD.
The company issued a forecast when announcing its quarterly figures, which stated that the adjusted profit margin would increase by 500 basis points (five percentage points) in the current year. This would equate to a spectacular improvement in profitability, considering that the adjusted margin was only at 1.6 percent the previous year.
However, this forecast proved too good to be true. During the teleconference with analysts, chief financial officer Erin Brewer clarified that the figure in the announcement contained one zero too many and it was merely an improvement of 50 basis points, which represents a more realistic 0.5 percentage points.
This led to the stock's nosedive within seconds. Ultimately, however, Wall Street was put in a positive mood after learning about the improvement of 0.5 percentage points.
Lyft Calculates Adjusted Margin as Ratio of Gross Revenue to Earnings Before Interest, Taxes, Depreciation, and Amortization. The company also exceeded market expectations for other metrics and forecasted a result of 50 to 55 million US dollars for the current quarter, while analysts had anticipated an average of only 49.5 million dollars.
In contrast to Uber, Lyft operates only in the USA and Canada. Competing with the larger rival, the company has invested a lot of money in recent years to attract drivers to the platform through incentives. In the fourth quarter of 2023, the loss per share decreased to $0.07 compared to -$1.61 in the same period of the previous year.
The revenue for the reported quarter was 1.2 billion US dollars, which was slightly below the expected 1.22 billion US dollars. However, compared to the previous year, when the revenue was at 1.18 billion US dollars, this represents an improvement.
For the full year, Lyft recorded a loss per share of 0.88 US dollars, while the previous year had seen a negative figure of -4.47 US dollars. Revenue increased from 4.10 billion US dollars the previous year to 4.4 billion US dollars, thus also exceeding the 4.40 billion US dollars expected by analysts.
The Uber competitor Lyft has thus incurred a higher loss than expected, but the company was also able to record an improvement in financial metrics. Above all, this was profitable for the invested investors who have patiently waited for a recovery of the company.
Despite the Typographical Error in the Business Forecast, Promising Growth is Still Expected, Creating a Positive Sentiment Among Investors.
