Earnings

February 13, 2024

Lyft’s IR Department Just Whiffed

Investor relations departments are the silent heroes of a public company, receiving little recognition for the critical role they play. When they do receive a lot of attention, it’s generally not for good reason. That’s unfortunately what Lyft’s team is finding out today. đŸ˜ĩ‍đŸ’Ģ

After the bell, ridesharing company Lyft reported fourth-quarter results that were good, not great. But the stock immediately shot up and notched as high as a 60% gain before anyone realized what happened. Did the company just invent a cure for rare diseases? Are they pivoting to crypto or semiconductors? What was the cause of this?

While everyone was trying to figure it out, those reading the press release while listening to management’s conference call quickly realized the issue. A typo in the company’s press release indicated that management expected adjusted EBITDA margin expansion of 500 bps YoY. đŸ¤¯

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For a business struggling to achieve profitability, that’s a damn big deal, causing the trading algorithms to furiously buy up shares at any price. 📈

Unfortunately, if it sounds too good to be true, it often is. On its earnings call, the company’s CFO acknowledged the snafu and said the correct figure is 50 bps, not 500. That sent shares tumbling, but they did manage to settle nearly 20% above today’s closing price. đŸ”ģ

Like we said, the earnings were pretty good despite the major distraction. Adjusted earnings per share of $0.18 beat expectations of $0.08, while revenues of $1.22 met estimates. First-quarter estimates for gross bookings also came in higher than anticipated.

Ultimately, the company is on track to be full-year free cash flow positive for the first time in 2024. So it’s making progress, just not as much as its press release initially indicated. 💸

Time will tell how investors adjust positions in the days ahead. But one thing’s for sure: someone’s head is rolling in the company’s investor relations department. That is not the type of excitement you want to see after earnings, especially when your results were pretty good to begin with. đŸ¤Ļ

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