Lyft shares experienced an astonishing 62% surge following a seemingly innocent typo in the company’s earnings release, triggering an unexpected buying frenzy among investors’ auto-trading algorithms, or “bots.”
The initial forecast in Lyft’s fourth-quarter report suggested a significant 500 basis points increase in a crucial profit metric by 2024. However, a correction issued merely five minutes later revealed that there was an extra zero in the number, bringing the realistic expectation down to 50 basis points, or 0.5%.
Despite the correction leading to a temporary retreat in share value, Lyft’s stocks still maintained a remarkable 37% increase, settling at $16.69 per share in early Wednesday trading. This surge was fueled by the company’s ability to surpass most Wall Street expectations for the quarter.
Lyft’s gross bookings outperformed forecasts, climbing 17% year-over-year to reach $3.7 billion. Additionally, the company’s first-quarter booking guidance, ranging between $3.5 and $3.6 billion, exceeded projections.
In the reported period, Lyft earned 19 cents per share, surpassing industry analysts’ predictions of 8 cents. This marked a significant turnaround from the last quarter of 2022 when the company incurred a substantial loss of 76 cents per share. In the subsequent four quarters of 2023, Lyft consistently exceeded profit targets, surprising Wall Street with profits when losses were anticipated.
Traditionally overshadowed by rival Uber, Lyft’s recent success can be attributed to its ability to adapt during the pandemic-induced ride demand slump, coupled with its expansion into the rapidly growing food delivery sector.
The critical typo in the earnings release pertained to the adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) margin expansion, calculated as a percentage of gross bookings.
With this unexpected boost, Lyft shares have now entered positive territory for 2024, showcasing an impressive growth of over 11% year-to-date.