NEW YORK - It was, without a doubt, a strong earnings report.
American ride-hailing company Lyft projected adjusted earnings as much as 11 per cent higher than analysts’ estimates, and reported bookings ahead of expectations.
And then there was the outlook for profitability: Profit margins, Lyft said in an initial press release, were set to expand in 2024 by an eye-watering 500 basis points.
Shares surged 67 per cent in after-hours trading, a move that could have nearly doubled Lyft’s market value if it had held up.
But the projection was off. Way off.
Less than an hour after issuing the statement, Lyft chief financial officer Erin Brewer joined a call with analysts and said the company is actually expecting margins to expand by 50 basis points – not 500 – acknowledging that the press release was incorrect.
A company spokesperson later attributed the mistake to a “clerical error” and noted the figure would be corrected in filings. It was unclear when the revisions would be filed, but shares almost immediately began giving up gains.
By 8pm New York time, they were largely unchanged, raising the potential for market complaints.
It is a “black-eye moment” for Lyft, said Wedbush Securities analyst Dan Ives, “a debacle of epic proportions”.
He said by e-mail that he had “never seen an error like this in my almost 25 years on the Street”.
The mistake overshadowed what was otherwise a solid beat on profit and bookings projections that signalled a years-long effort to boost ridership and challenge Uber Technologies may be paying off.
In fact, both Lyft and Uber delivered strong earnings reports this quarter, suggesting continued growth in overall rider demand since a nationwide plunge during the Covid-19 pandemic.
The two have spent fiercely to recruit and retain enough drivers to meet the rise in orders.
Lyft chief executive David Risher, who took the helm less than a year ago, has focused the operations on customer satisfaction and has emphasised a return to the basics in an effort to close the gap with Uber.
Lyft has spent millions of dollars to lure drivers but has had a hard time boosting its rider base.
In the fourth quarter, Lyft said gross bookings jumped 17 per cent from a year earlier to US$3.72 billion (S$5.02 billion), ahead of estimates for US$3.67 billion.
Revenue was US$1.22 billion, up 4 per cent from a year earlier and in line with projections.
The company projected adjusted earnings of as much as US$55 million in the first three months of 2024, topping analysts’ estimates of US$49.5 million.
Like many areas of the US economy, Lyft also saw a Taylor Swift bump.
High-attendance stadium events such as concerts by Swift and Beyonce, the US Open tennis tournament and football games helped boost rides by 35 per cent, Lyft said. BLOOMBERG
