Shares in ride-sharing company Lyft (NASDAQ:LYFT) are rising 35% so far today despite the firm making a big mistake on its forward guidance. LYFT stock briefly jumped 60% after a press release on earnings goofed on describing future margin expansion.
The original release misstated that margins would rise 5%. However, Lyft is actually projecting margins to rise just 0.5%. The company and Chief Financial Officer Erin Brewer called the mistake a typo.
As a result, $2 billion in market capitalization had to be cut from a company previously worth around $5 billion. As of this writing, however, Lyft’s market cap is now up closer to $6.5 billion.
LYFT Stock and the Unnecessary Lift
Lyft’s results still represent a turnaround from the mountain of losses it sustained in 2022. The company reported net income of $71.1 million and free cash flow of $14.9 million on revenue of $1.22 billion during the fourth quarter. During the same period a year earlier, the firm lost $270.8 million, with negative free cash flow of $66.2 million, on revenue of $1.17 billion.
CEO David Risher also said in the press release that Lyft delivered over 700 million rides during the year, earning drivers $8 billion. This has helped position the company to “drive meaningful margin expansion” and work toward its “first full year of positive free cash flow.”
That said, Lyft is still miniscule next to rival Uber (NYSE:UBER), which is now worth $157 billion after posting its first annual profit.
During a conference call, Risher talked of “continuous innovation” like a feature that lets riders prioritize female and nonbinary drivers. The company also added an “on-time pickup promise” at major airports, offering up to $100 in credits if a driver is more than 10 minutes late to such a pickup.
All is not well for ride-sharing companies, however. Drivers are striking today in several cities and demonstrating at several airports. A spokesman for the organizers, called Justice for App Workers, called ride-sharing a “mobile sweatshop.”
What Happens Next?
Lyft’s big day means that LYFT stock is now up more than 50% for the the last one year. However, shares are still down roughly 60% since early 2022.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
