Did earnings disclosure mistakes cause Lyft stock to rally after hours?
When Lyft Inc. released its earnings call Tuesday afternoon, the ride-hailing platform expected to post a profit on its adjusted revenue metrics this year. But in the company’s earnings call, management issued a correction, saying the increase was actually smaller than initially said.
In the process, the stock surged in value over time (soaring more than 60% at one point), fell quickly, and then still maintained a solid gain of around 18%. lift lift,
A request for comment was not immediately responded to.
In its earnings call, Lyft forecast adjusted Ebitda margin expansion (earnings before interest, taxes, depreciation, and amortization) of about 500 basis points, or about 5%, this year.
But during the call, Chief Financial Officer Erin Brewer said the company was expecting a 50 basis point expansion. When the analyst asked her to reconcile the two numbers, she said the correct number was actually 50.
“This is actually a correction to the press release. My prepared remarks are correct. I mentioned margin expansion by 50 basis points,” she said during the call.
Ahead of the call, Lyft said Tuesday that it expects two key demand indicators to beat Wall Street expectations going forward and that it expects free cash flow to be positive for the first time in the period.
The company has made major staff cuts over the past two years and made the forecast while keeping insurance and other costs constant. More people used Lyft more frequently during last year’s holiday season as travel picked up and employees turned to Lyft for their commutes. But the ride-hailing industry’s broader rebound has benefited its larger competitor, Uber Technologies Inc. It also trickled down to UBER.
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He said ridership growth is expected to be in the mid-teens this year. That’s about 11% better than FactSet forecasts.
Additionally, growth in total bookings, or the amount customers are charged for services such as rides, scooter rentals, and subscriptions that offer additional perks, is expected to slightly outpace ridership growth. FactSet called for a roughly 12% increase in bookings.
Lyft expects total bookings to reach about $3.5 billion to $3.6 billion in the first quarter. That’s higher than the $3.46 billion predicted by FactSet.
Commute traffic increased 27% during the quarter, CEO David Rischer said in an interview. He also said the division that handles commuter vehicles includes Starbucks Corp., SBUX;
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and Delta Air Lines Inc. DAL;
— Accounts for more than 20% of all annual rides.
This segment can help employees commute during off-hours (when public transportation is not available) or when parking is limited. Risher declined to say how big he thinks the sector could grow. However, he noted that Lyft recently reorganized to focus more on large enterprise customers.
“It’s definitely an area where we’re doubling down. “It actually is,” he said.
Lyft’s quarterly financials come after rival Uber reported fourth-quarter earnings that topped expectations last week. Analysts praised the platform’s profitability, as well as the increase in subscribers paying for additional benefits and the growth of its advertising business, which allows outside companies to pay for ads that appear on Uber apps.
But BofA analysts said on an earnings call Tuesday that they hope Uber will keep prices in check, potentially increasing competition from Lyft and warning that the insurance it provides to drivers will be more expensive.
Risher said Lyft is likewise grappling with higher insurance costs. But he said none of Uber’s moves prompted the company to change its pricing strategy.
Lyft reported a net loss of $26.3 million, or 7 cents per share, in the fourth quarter, compared to a loss of $588.1 million, or $1.61 per share, in the same quarter a year earlier.
Lyft’s adjusted earnings per share of 18 cents beat the FactSet forecast of 8 cents. Sales rose 4% year-over-year to $1.22 billion, nearly matching estimates of $1.22 billion. Total bookings increased 17% to $3.72 billion, beating expectations of $3.69 billion.
Lyft’s stock price has risen 12.4% over the past 12 months. By comparison, the S&P 500 index SPX is up 19.1% over the period.
