Lyft, the popular ride-hailing service, experienced a significant surge in its shares during after-hours trading on Tuesday. The unexpected jump of as much as 66% was triggered by a typo in the company’s latest earnings report, which mistakenly suggested a substantial increase in profitability. However, Lyft quickly clarified the error, causing the stock to settle at around 16% above its closing price.
The confusion arose when traders misinterpreted the adjusted EBITDA margin as a percentage of bookings, believing it could expand by 500 basis points (equivalent to 5%) by 2024. In reality, the forecasted expansion is only 50 points, or 0.5%, according to Lyft’s fourth-quarter earnings report. The correction was made during an earnings call with analysts by Lyft’s chief financial officer, leading to a drop in the stock price to just over $14 per share.
Despite the typo overshadowing the news, Lyft’s earnings report was generally positive. The company reported a revenue of $1.2 billion, marking a 4% year-over-year increase. This demonstrates that Lyft is making progress in reducing its losses and moving towards profitability. In the fourth quarter of 2023, Lyft reported a net loss of $26.3 million, a significant improvement compared to the $588 million loss in the same period the previous year. Additionally, Lyft managed to reduce its net losses for the full year of 2023 to $340.3 million, down from $1.6 billion in 2022.
Lyft’s strong performance is expected to continue in the first quarter of this year, with gross bookings projected to reach up to $3.6 billion. This surpasses analysts’ expectations and indicates a promising start to 2024 for the company. In fact, Lyft expressed confidence in its ability to generate positive free cash flow this year, which would be a significant milestone for the ride-hailing giant.
It is worth noting that Lyft’s rival, Uber, recently announced that it achieved profitability for the first time since going public. This further highlights the positive trajectory of the ride-hailing industry and the potential for companies like Lyft to turn a profit in the near future.
Overall, while the initial surge in Lyft’s shares was based on a typo, the company’s earnings report still showcases its progress towards profitability. Lyft’s ability to reduce losses and increase revenue demonstrates its resilience and potential for long-term success in the competitive ride-hailing market. As investors continue to monitor the company’s performance, it will be interesting to see if Lyft can maintain its positive momentum and achieve its goal of positive free cash flow in 2024.