After the US stock market closed on Tuesday (February 13th), ride hailing service provider Lyft released its financial performance reports for the fourth quarter and full year of 2023.
The financial report shows that the company's total order volume increased by 17% year-on-year in the fourth quarter of last year, to 3.7 billion US dollars; Revenue also increased by 4% to $1.2 billion, consistent with market expectations; The earnings per share for the quarter were $0.18, which is more than twice Wall Street's expected $0.08.
Even more surprising, Lyft stated in its initial financial report that the company expects a "year-on-year increase of approximately 500 basis points" in the adjusted EBITDA profit margin for the 2024 fiscal year. One basis point is equal to 0.01 percentage points, which means the company expects a 5 percentage point increase in profit margin.
For shared mobility companies, this is an extremely important indicator, equivalent to the proportion of profits the company earns from customer orders. The higher this number, the higher Lyft's commission from each order. Although this indicator often fluctuates greatly, a 5% increase is enough to cheer investors.
Affected by this news, Lyft rose by over 65% after trading. But soon after, the company's CFO Erin Brewer clarified in a conference call with analysts that this profit margin indicator was expected to expand by only "50 basis points", or 0.5%, instead of the 5% originally reported. Lyft subsequently released a correction statement.
As of publication, Lyft's growth rate has narrowed to around 15%. According to Dan Ives, analyst at investment bank Wedbush Securities, this is a "painful moment" and an "unprecedented collapse" for Lyft. Ives stated that he "has worked on Wall Street for nearly 25 years and has never seen such a mistake."
According to Brad Foster, a partner at Haynes Boone, a law firm specializing in securities litigation, Lyft did one thing right - the company quickly and decisively corrected its mistakes. "People do make mistakes, and such mistakes are not considered securities fraud."