Lyft Inc. LYFT CEO David Risher has shouldered the blame for a significant error in the company’s fourth-quarter earnings report, which led to a massive stock surge before a correction was issued.
What Happened: Risher admitted to the error in the earnings report during an interview with CNBC’s “Squawk Box,” calling it “super frustrating” for the entire team, CNBC reported. The report, released on Tuesday, initially indicated a 500 basis point (5%) margin expansion for Lyft in 2024, causing the stock to soar by over 60%.
However, during the quarterly investor call, Lyft CFO Erin Brewer clarified that the actual increase would be 50 basis points (0.5%). This correction led to a significant drop in the stock’s value, equivalent to over $2 billion in market cap.
“Look, it was a bad error, and that’s on me,” Risher admitted.
"It's a terrible thing. It is an extra zero that slipped into a press release."
The stock still experienced a 35% surge on Wednesday, marking its best day since the company’s IPO in 2019. Despite the correction, Lyft’s numbers surpassed analysts’ estimates, with a revenue of $1.22 billion for the quarter and an adjusted earnings of 18 cents per share.
Why It Matters: Lyft’s stock initially soared by over 60% in after-hours trading on the back of its fourth-quarter earnings before the company corrected its guidance on the conference call. The company’s results, which were largely in line with analyst expectations, combined with strong guidance, sent shares racing higher.
Following the correction, Tesla’s Investor Relations Vice President, Martin Viecha, termed the error as the biggest nightmare for an investor relations professional and added that the error and subsequent correction gave him “chills.”
Photo via Shutterstock
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