Lyft shares rocket 62% over a typo in the company’s earnings release

Category: Business


Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. typo / ˈtaɪ poʊ / (n.) – a small mistake in a text that is typed or printed

    Let me correct the typo in my essay before submitting it.

  2. year-over-year / yɪər ˈoʊ vər yɪər / (adj.) – (of business or finance) describing a comparison of data for one year against the same period in the previous year

    The company’s profits increased 10% year-over-year, showing steady growth.

  3. subsequent / ˈsʌb sɪ kwənt / (adj.) – happening or coming after something in time or order

    After the heavy rain, subsequent floods became a major concern for the residents.

  4. play second fiddle / pleɪ ˈsɛk ənd ˈfɪd l / (idiom) – to be in a less important or weaker position in comparison to someone or something else

    As a young employee, I have often played second fiddle to my more experienced co-workers.

  5. slump / slʌmp / (n.) – the sudden fall or decrease of prices, values, or sales

    The economy faced a slump due to the global crisis.


Read the text below.

Lyft shares jumped 62% after the closing bell on February 13 thanks in part to a typo in the ride-hailing company’s earnings release that appears to have sent investors’ auto-trading algorithms—or “bots”—into a buying frenzy.

Lyft’s fourth-quarter report initially forecast that an important profit metric was expected to climb by 500 basis points, or 5%, in 2024. However, the company informed investors about five minutes after the original release that there was one zero too many in that number and corrected it to 50 basis points, a much more realistic 0.5%.

Shares retreated after the correction but remained more than 37% higher—at $16.69 per share—in early February 14 trading because the company topped most Wall Street expectations for the quarter.

Lyft’s gross bookings beat Wall Street forecasts, rising 17% year-over-year to $3.7 billion. Lyft’s guidance for first-quarter bookings between $3.5 and $3.6 billion also came in higher than projections. The San Francisco company earned 19 cents per share in the period, more than doubling the 8 cents that industry analysts were expecting.

Lyft has appeared to turn things around since the last quarter of 2022 when it posted a whopping loss of 76 cents per share. In the four subsequent quarters of 2023, Lyft has easily beat profit targets, twice posting profits when Wall Street was expecting losses.

The company has long played second fiddle to rival Uber, which softened the pandemic ride demand slump by expanding rapidly into food delivery.

The profit metric that contained the typo on February 13 is referred to as adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) margin expansion, which is calculated as a percentage of gross bookings, according to Lyft.

With February 14’s boost, Lyft shares are now in the green for 2024, up more than 11% to date.

This article was provided by The Associated Press.

Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

  • The article mentions that Lyft’s shares initially surged due to the typo but were corrected after the error was acknowledged five minutes after the release. Considering Lyft’s transparency and quick response, how do you think this incident would impact investors’ trust in the company’s management? Discuss.
  • If you were one of the investors, how would you react to the correction? Would you withdraw your investment? Why or why not? Discuss.

Discussion B

  • Lyft shares are up more than 11% to date after the typo incident which could be attributed to luck if not strategy. Do you believe that luck plays a role in investment success, or should it only be driven by data analysis and strategy? Why? Discuss.
  • Do you think that Lyft should have faced any kind of punishment for such an error which misled investors? Why or why not? Discuss.