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Lyft’s Stock Plummets Following Disappointing Fourth-Quarter Results
Shares of Lyft experienced a notable decline, dropping approximately 7.9% after the ride-sharing platform reported disappointing results for the fourth quarter and issued dim guidance for future bookings. The company is actively reducing prices in a bid to remain competitive in a crowded market.
For the fourth quarter, Lyft posted revenue of $1.55 billion, slightly below analysts’ forecasts of $1.56 billion, as per LSEG. This figure represents a 27% increase from $1.22 billion reported in the same quarter last year. However, the company’s bookings—reflecting the total revenue generated from rides and services—amounted to $4.28 billion, which fell short of the FactSet estimate of $4.32 billion.
In an interview on CNBC’s “Squawk Box,” CEO David Risher expressed optimism about the company’s future, citing the vast market potential. “We got to figure out how to get the traders on the bus,” he noted, emphasizing the company’s commitment to navigating its challenges.
Despite missing revenue expectations, Lyft surpassed earnings projections with an adjusted profit of 29 cents per share, outpacing the anticipated 22 cents. This adjusted figure excludes specific charges and reflects a strategic approach to managing operating costs.
However, the forecast for gross bookings is concerning, as Lyft expects this metric to land between $4.05 billion and $4.20 billion—lower than the $4.24 billion FactSet estimate. During the earnings call, CFO Erin Brewer highlighted the decision to lower prices and offer discounts as essential strategies to maintain market share. She warned that ongoing pricing pressures might have a modest impact, expected to alter gross bookings by a low single-digit percentage.
Additionally, Brewer indicated that the conclusion of Lyft’s partnership with Delta Air Lines is likely to negatively affect rides and gross bookings, projecting an impact of approximately 1% to 2% during the second quarter.
Lyft is not alone in facing scrutiny; last week, its primary competitor, Uber, also experienced a drop in shares following a mix of fourth-quarter results and a cautious outlook. Uber’s challenges were compounded by its acknowledgment that the rollout and commercialization of autonomous vehicles may take several years.
On a brighter note, Lyft recorded a net income of $62.8 million for the fourth quarter, equating to 15 cents per share, a stark contrast to the $26.3 million loss incurred in the same quarter a year earlier. Notably, the company reported 24.7 million active riders during the period, surpassing the StreetAccount estimate of 24.6 million.
In conjunction with these financial results, Lyft announced a $500 million share repurchase plan, indicating a strategy to bolster shareholder value. Furthermore, the company is targeting the launch of its Mobileye-powered taxis in Dallas by 2026, signaling a move towards innovation in its service offerings.
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