Lyft's earnings report typo sends shares soaring
Lyft corrects earnings report to fix clerical error; stock's momentum continues after typo was fixed
Lyft CEO: Human error caused quarterly report mistake
David Risher on record rally, gig worker strike and profit margin typo.
A typographical error in Lyft’s earnings report released Tuesday sent the ride-sharing platform’s stock soaring before the company announced the corrected figures and issued a revised filing.
Lyft’s initial report projected that one of its profit margin metrics was expected to grow by 500 basis points — a 5 percentage point increase — this year. This particular financial metric, the adjusted earnings margin as a percentage of bookings, effectively signals how large of a profit Lyft receives through its bookings.
That sent Lyft’s stock soaring by about 67% until about an hour after the earnings report was released, when Lyft's chief financial officer, Erin Brewer, clarified that the forecast meant to signal an increase of 50 basis points, or 0.5 percentage points. Lyft issued an 8-K to correct and flag the clerical error in the initial report.
Despite the error and subsequent correction, Lyft’s strong earnings report included a forecast for better-than-anticipated bookings in the current quarter and the company said it expects to be cash flow-positive this year. That kept the positive momentum going for Lyft’s stock into Wednesday’s trading session even after the corrected report was filed.
THOUSANDS OF UBER, LYFT, DOORDASH DRIVERS TO STRIKE ON VALENTINE’S DAY TO DEMAND FAIR PAY
![Lyft Ridesharing](https://a57.foxnews.com/static.foxbusiness.com/foxbusiness.com/content/uploads/2024/02/931/523/Lyft-Ridesharing.jpg?ve=1&tl=1)
Lyft's initial earnings report signaled an increase of 500 basis points, or 5%, in a key financial metric before it was corrected to show a projected gain of 50 basis points, or 0.5%. (AaronP/Bauer-Griffin / GC Images / Getty Images)
Lyft’s stock spiked to $17.55 a share during after-hours trading Tuesday following the release of the initial, erroneous report after it closed at $12.13 a share. Following the correction, it declined into the $14 range on Tuesday night. About 48 million shares were traded after-hours Tuesday, an amount more than triple the usual daily regular-session volume for Lyft’s stock.
The stock surged Wednesday, hitting $16.65 a share, or a gain of 37.26%, during morning trading — a level that would be the company's largest percent increase on record.
Lyft’s stock was trading around $15.82 in midafternoon — an increase of 30.4% on the day.
Ticker | Security | Last | Change | Change % |
---|---|---|---|---|
LYFT | LYFT INC. | 11.06 | -0.19 | -1.69% |
In an appearance on FOX Business' "The Claman Countdown" on Wednesday, Lyft CEO David Risher said that the mistake was "on me" as the company's leader and that Lyft's internal audit team looked into the issue this morning and found it was a byproduct of "human error" in preparing the report.
"It's just, you know, a lot of people just working really, really hard to do great, great work. And unfortunately, this one just slipped through the cracks," Risher said. "And the only thing I can say there is we're very focused on making sure it doesn't happen again, of course, but we're also taking super seriously the fact that it did happen."
LYFT TO ENSURE DRIVERS RECEIVE BASELINE PERCENTAGE OF RIDER FARES
![Lyft CEO](https://a57.foxnews.com/static.foxbusiness.com/foxbusiness.com/content/uploads/2023/05/931/523/Lyft-ceo.jpg?ve=1&tl=1)
Lyft CEO David Risher told FOX Business' Liz Claman that the typo was a "human error" that the company is taking seriously. (Jason DeCrow / Lyft / Fox News)
While Lyft has issued its corrected filing, the typo may result in some regulatory scrutiny of the error and the market’s reaction to it, though it’s unclear whether the company will face any legal liability.
"The [Securities and Exchange Commission] will probably review the situation given the scale of the share price movement upon release of the original results and Lyft could potentially be fined," Dan Coatsworth, an investment analyst at AJ Bell, told Reuters.
![Lyft](https://a57.foxnews.com/static.foxbusiness.com/foxbusiness.com/content/uploads/2022/08/931/523/side-hustle-2.jpg?ve=1&tl=1)
Lyft's stock continued to rise even after the earnings report was corrected to fix the clerical error. (David Paul Morris / Bloomberg / File / Getty Images)
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Bobby Reddy, professor of corporate law and governance at the University of Cambridge, told Reuters, "Since the error relates to a forecast, it’s unlikely that liability under securities regulations will not attach unless it can be proved that it was made with knowledge that it was wrong or with some intent to mislead."
During his FOX Business appearance, host Liz Claman asked Risher if he had heard from regulators about the incident and the Lyft CEO declined to comment given that regulators "kind of have their own path." He added that the company thinks they did as well as they could to quickly correct the issue with the forward-looking guidance.
Risher also declined to weigh in on the possibility of shareholder lawsuits and noted that the issue was corrected relatively quickly during after-hours trading.
Reuters contributed to this report.