What Happened:
Shares of ride sharing service Lyft (NASDAQ: LYFT) fell 15.5% in the after-market session after the company reported revenue and earnings per share (EPS) in the first quarter that came in ahead of analysts' estimates. Active riders was in-line while revenue per rider beat slightly. However the company still faces cash burn issues. In addition, revenue and adjusted EBITDA guidance for the next quarter missed analysts' expectations. This means the debate continues on long-term growth and margin levels. Overall, the results were poor, especially in light of Uber's strong earnings earlier this week.
What is the market telling us:
Lyft's shares are quite volatile and over the last year have had 71 moves greater than 5%. But moves this big are very rare even for Lyft and that is indicating to us that this news had a significant impact on the market's perception of the business. The previous big move was about 1 month ago, when the company gained 5.02% on the news that it named David Risher, a former Amazon and Microsoft executive and co-founder of Worldreader, as its new CEO effective April 17. Risher, who joined Lyft's board in July 2021, helped Amazon grow from a small online bookstore to a retail giant and received a permanent thank-you from Jeff Bezos on its website. Logan Green and John Zimmer, who started the company and held the positions of CEO and President, will shift to the board as Chair and Vice Chair, giving up their executive responsibilities, effective April 17 and June 30, respectively.
Lyft is down 22.8% since the beginning of the year, and at $8.60 per share it is trading 61% below its 52-week high of $22.03 from May 2022. Investors who bought $1,000 worth of Lyft's shares at the IPO in March 2019 would now be looking at an investment worth $109.72.
Is now the time to buy Lyft? Access our full analysis of the earnings results here, it's free.