LYFT adds 35% despite margin expansion flub

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  • LYFT stock gains over 35% on Wednesday following margin expansion snafu.
  • Management said adjusted EBITDA would expand by 50, not 500, basis points in 2024.
  • Earnings and revenue outpaced consensus for the fourth quarter.
  • Net income losses greatly plunged from a year ago for the rideshare company.

 

Don’t let anyone tell you that mistakes can’t sometimes improve a situation. Lyft (LYFT) stock, the rideshare competitor to Uber (UBER), has benefited dramatically on Wednesday from a typo in its fourth-quarter earnings results.

Lyft stock closed up 35.1% to $16.39 on Wednesday, while Uber stock jumped 14.7% on the announcement that it will buy back up to $7 billion in stock. Uber stock was already surging prior to the buyback announcement due to Lyft’s soaring stock price. The NASDAQ and S&P 500 advanced 1.3% and 0.96%, respectively.

Upon initially releasing its fourth-quarter earnings report late Tuesday, a statement from Lyft said that adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) would expand in 2024 by 500 basis points. LYFT stock rocketed afterhours on Tuesday due to that typo, and at one point the spike climbed above 60%, before management corrected the sentence to say 50 basis points.

Lyft stock earnings news

Still, Lyft stock has gained more than 35% on Wednesday in the aftermath of the basis point flub, and it is hard to argue that initial euphoria regarding the typo did not play some part in Wednesday’s share price spike.

Of course, there was ample speculation that heavy shorting prior to the earnings release had led to a short squeeze, causing the shorts to repurchase stock in order to close out their positions. About 13% of the LYFT float was held short in the lead-up to earnings.

The fourth quarter results themselves were quite good though. Adjusted earnings per share (EPS) in the fourth quarter reached $0.16 per share — an 8-cent beat. GAAP EPS was $-0.06, which beat Wall Street consensus by 12 cents. The company’s net loss fell from $588 million in the previous year’s quarter to a loss of $26 million in Q4 2023.

Revenue rose 4% YoY to $1.22 billion, which narrowly beat Wall Street consensus by $3 million. But gross bookings hiked 17% from a year ago to $3.7 billion.

Q4 total rides rose 26% from a year prior to 191 million. Additionally, Lyft’s total number of rides in 2023 of 709 million rose 18% from 2022.

 

EV stocks FAQs

Electric vehicles or EVs are automobiles that use rechargable batteries and electric motors to accelerate rather than internal combustion engines (ICEs). They have been around for more that 100 years, but battery technology research & development was meager for much of the 20th century. Lithium-ion battery technology became advanced enough to produce EVs at scale in the late 1990s and 2000s, and sales have been steadily increasing since then Tesla’s Roadster was unveiled in 2008. EVs are viewed as a means of reducing carbon emissions since battery electric vehicles (BEVs) themselves produce zero emissions. Other vehicles called plug-in hybrid electric vehicles (PHEVs) utilize both battery electric power and ICEs as a backup.

EVs are growing from a small base, but they rose from 9% of global new auto sales in 2021 to 14% of the total in 2022. This was a 65% YoY growth rate, and the industry delivered 10.2 million EVs worldwide in 2022. Projections show this number climbing above 16 million in 2023. Across the world, market shares differ greatly among nations. Nearly 88% of Norwegian new car sales in 2022 were EVs. On the other hand, the United States, where much of the modern innovation in EVs was forged, had less than 8% of new vehicle sales go to EVs in 2022. The largest EV market in the world, China, saw 30% of the market go to EVs that year.

We know you’re thinking Elon Musk, but he’s probably more like the father of the mass-market, contemporary EV. All the way back in 1827, a Hungarian priest named Anyos Jedlik invented the electric motor and used it the following year to power a vehicle of sorts. French scientist Gaston Planté invented the lead-acid battery in 1859, and German engineer Andreas Flocken built the first true electric car for the public in 1888. EVs made up about 38% of all vehicles sold in the US around 1900. They began losing market share rapidly after 1910 when gasoline-powered vehicles grew much more affordable. They largely died off until new research programs in the 1990s led to gradual private sector investment in the 2000s.

China’s BYD is by far the largest manufacturer of EVs in the world. In 2022 it sold 1.8 million EVs and in the second half of the year made up 20% of the global market. The asterisk given to BYD is that the vast majority of these vehicles are hybrids. Tesla’s 12% market share is often treated as more significant than BYD, because it only sells BEVs and is the most famous EV brand in the world. Volkswagen, BMW and Wuling then round out the top five. As a new sector with heavy investment though, many startups have flooded the market. These include China’s Nio, Li Auto and Xpeng; a Swedish-Chinese manufacturer called Polestar; and Lucid and Rivian from the US.

Lyft stock forecast

Lyft stock reached a one-year high on Wednesday at $16.77. LYFT stock has not traded at that latitude since February 9, 2023. After traders took some profits off the table on Wednesday, LYFT stock has settled in after lunchtime just below the December 18 high of $15.95.

A close above that prior range high will hearten bulls to hold onto the stock, which could persaude the party to continue. However, a descent to support at the 50-day Simple Moving Average (SMA), which is currently trading near $13.50, would still amount to needed consolidation before a further leg up.

LYFT daily stock chart

 

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