The ride-share app's stock gained due to an error in its earnings release
Zero is a powerful number. On its own it can be hugely negative, such as returns of zero percent, or a zero account balance. But when it’s at the end of a number in a profit forecast it can spark a market frenzy.
This was the case this week when ride-sharing technology Lyft released its earnings report, which stated that it expected Adjusted EBITDA margin expansion to rise by 500 basis points year-over-year. Investors snapped up the firm’s shares which soared 62% after the closing bell Tuesday.
The buying frenzy was dampened minutes later when the firm published corrected information stating that it should have read 50 basis points – 0.5% instead of the 5% previously reported.
In an interview with Bloomberg, Lyft CEO David Risher said that although there were “a lot of eyes on the press release” and the end of the day it was “my bad.” But he added that he didn’t want the mistake to detract from the “butt kicking performance” of the business and its drivers.
Asked if the press release had been written by AI, Risher laughed and said that it was not. The error was made by a human, and he said the firm was not at the point where a financial release would be trusted to AI.
Risher also said that his team is taking the wrongly reported information extremely seriously, but he stated that his CFO’s job is not on the line. He said that it’s not only about how mistakes are made, but how they are corrected – and this was done swiftly.
Positive momentum
Some of the positive momentum remained though with Lyft up 37% early Wednesday as even the correct stats proved better than most Wall Street expectations.
Revenue for the full year was $4.4 billion, up 8% year-over-year, while fourth quarter revenue was up 4% to $1.2 billion. Net losses fell from $1.6 billion for the full year in 2022 to $340.3 million.
“Lyft’s outstanding Q4 performance demonstrates our team’s incredible work to build a solid foundation for profitable growth,” said CFO Erin Brewer. “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.”
