As of: February 14, 2024, 1:43 p.m
By: Amy Walker
Comments
Press
Split
Unlike Uber, Lyft is only active in the USA and Canada.
© Jens Kalaene/dpa-Zentralbild/dpa
The forecast was too good to be true: Because of a typo, Lyft's share price shot up by more than 60 percent.
But just as quickly as it went up, it went down again.
San Francisco - A typo in the business forecast has given Uber rival Lyft's shares an extraordinary rollercoaster ride.
The price initially shot up by more than 60 percent in after-hours trading - and then fell sharply after the outlook was corrected.
When presenting quarterly figures, the ride-hailing agent promised that the adjusted profit margin would improve by 500 basis points (i.e. five percentage points) in the current year.
That would be a spectacular improvement in profitability: last year the adjusted margin was just 1.6 percent.
The prognosis was actually too good to be true.
CFO Erin Brewer made it clear in the conference call with analysts a good half hour later that the number in the announcement contained one zero too many and that it was only an improvement of 50 basis points.
That would be a much more realistic 0.5 percentage points.
Stock nosedives after correcting typo
The stock then nosedived within seconds.
At times the price increase was only seven percent, but in the end the share left after-hours trading with an increase of just under 16 percent.
Wall Street was also positive about a 0.5 percentage point improvement.
Lyft calculates adjusted margin as the ratio of gross revenue to earnings before interest, taxes, depreciation and amortization.
Lyft also exceeded market expectations in other metrics.
The company forecast earnings before interest, taxes, depreciation and amortization of between $50 and $55 million for the current quarter.
Analysts on average had only expected $49.5 million.
Unlike Uber, Lyft is only active in the USA and Canada.
In competition with its larger rival, the company has spent a lot of money in recent years to attract drivers to the platform through incentives.
(dpa/wal)