Lyft stock surges 60%, flat to 17% on margin revision, stock still rising on positive outlook

Lyft’s stock price soared more than 60% on Feb. 13 after the company announced optimistic profit and booking forecasts that beat investors’ expectations. However, after an initial stock rally, Lyft faced a setback when it revealed an error in its margin forecast on an earnings call, and the stock leveled off to a gain of about 17% in late trading.

Lyft stock soared 67%, but then fell back, losing most of its gains during a correction. According to Reuters, about 47.8 million shares of Lyft traded in after-hours trading, according to Nasdaq and LSEG data, exceeding Lyft’s normal daily volume of about 13.6 million shares over the past 50 regular trading sessions. Ta.

“The error in margin forecasting, which Lyft claimed was due to an administrative error, is a sore point for Lyft. This is an epic failure. In nearly 25 years of street work, I have never made a mistake like this. I’ve never seen it before,” analyst Dan Ives said. A Wedbush Securities reporter told Bloomberg.

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The company revised its 2024 margin forecast from 500 basis points to 50 basis points in a conference call with Chief Financial Officer Erin Brewer.

Notably, despite the downward revision, earnings forecasts showed promising results from the ride-hailing company’s efforts to increase ridership and compete with industry giant Uber Technologies. This means that stock prices remain healthy. Other positive predictions also supported it.

The company expects first-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be in the range of $50 million to $55 million, higher than analysts’ expectations of $49.5 million. The total value of ride bookings, excluding tips, is expected to be between $3.5 billion and $3.6 billion, higher than expected.

Overall strong performance in the fourth quarter

Lyft reported strong fourth quarter results, with gross bookings up 17% to $3.72 billion and revenue up 4% year-over-year to $1.22 billion. The number of active riders on the platform increased 10% to 22.4 million in the fourth quarter, contributing to Lyft’s highest annual ridership in history.

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“Lyft’s outstanding fourth quarter performance is a testament to our team’s great efforts to build a solid foundation for profitable growth. “We are able to enter 2024 with focus, which positions the company to drive significant earnings growth and our first full year of positive free cash flow,” said CFO Brewer.

Lyft CEO David Risher emphasized that cost-cutting measures were successful and led to positive outcomes. The company expects to become free cash flow positive for the first time in 2024. Risher aims to drive continued growth with a focus on operational excellence and strategic partnerships, including partnerships with LinkedIn and Starbucks.

“We’re going to put more money into the bottom line because we’ll be able to scale further and keep costs flat,” Risher told Reuters.

The battle with Uber continues, and drivers are struggling

Despite its strong progress, Lyft continues to lag behind Uber in market share, with about 30% of the U.S. rideshare market compared to Uber’s 70%. However, both companies reported strong revenue in the quarter, indicating sustained growth in passenger demand.

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Lyft’s efforts to attract more drivers and riders include its Women Connect program, in-app video ads, and efforts to stabilize driver income. But challenges remain, with Uber and Lyft drivers planning a strike on Valentine’s Day to protest low pay and unfair treatment.

Lyft’s stock has risen 15% over the past 12 months, lagging behind Uber, which is up more than 100%. The error in the margin forecast was attributed to an administrative error, and analysts including Wedbush Securities’ Dan Ives called it an “epic failure.”

(Information provided by Bloomberg and Reuters)