Lyft shares tumble as investors react to gloomy outlook

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By Webdesk

Lyft shares fell as much as 12% shortly after the company reported first-quarter earnings as investors placed more weight on poor prospects and lower quarter-over-quarter earnings than other financial gains.

The shares have since stabilized in after-hours trading and are now trading about 10%.

Lyft beat both its own and Wall Street revenue expectations, but it wasn’t enough to reassure investors focused on the ride-hailing company’s future.

The company ended the first quarter of the year with revenues of $1 billion, up 14% from the same quarter last year. It should be noted that revenue in the first quarter is down from the $1.2 billion it generated in the fourth quarter. Analysts had expected $977 million for the first quarter the company pledged $975 million in February.

That revenue gain comes on top of a net loss of $187.6 million, an improvement of 4.7% over the $196.9 million it lost in the same period last year. It is also significantly better than the $588.1 million in net losses posted in the fourth quarter of 2022. Lyft attributed much of that fourth-quarter loss to $201.3 million in stock-based compensation and related payroll tax expenses.

On an adjusted basis, Lyft earned $22.7 million, compared to $54.9 million a year ago. It is an improvement over the fourth quarter 2022 adjusted loss of $248.3 million.

The company’s operating cash flow was negative for the quarter with a loss of $188 million. Lyft ended the quarter with cash and cash equivalents of $509.6 million, up from $281 million last quarter.

Lyft gave a Q2 guidance of about $1 billion to $1.02 billion, indicating that the company doesn’t expect much growth in the coming quarter. On an adjusted EBITDA basis, Lyft expects to earn between $20 million and $30 million, with an adjusted margin of 2% to 3%.

Notably, the company has not issued a full-year outlook, a move that could suggest the company is uncertain about its future or an expectation of future changes.

The first quarter was a tumultuous one for Lyft as the company became a new CEO and presidentissued laid off for 26% of the staff and dropped certain offers like shared rides. David Risher, the former Amazon executive who took over from co-founders Logan Green and John Zimmer, said he wanted Lyft to focus on the basics of ride hail. Given these cost-cutting measures and the arrival of warmer seasons, which tend to be a boon for the ride-hail industry, investors may be put off by Q2 revenue expectations that mirror Q1.

During Lyft’s earnings call on Thursday, analysts and investors will want to know how the new leader will help Lyft continue to compete with Uber. The ride-hail competitor exceed analysts’ expectations and showed a strong financial foundation thanks to its business model that spans ride hail and delivery.

Meanwhile, Lyft has been cutting the extra fat from its business since last year discontinued its car rental program. This quarter, the company will also discontinue its Fleet products aimed at personal car ownership and spin Loop, the company’s cloud infrastructure, into a standalone company. Loop was operating in stealth mode and had a single-digit team, according to a Lyft spokesperson.

Lyft didn’t share much in the way of updates on its bikeshare business. Risher merely reiterated the company’s plan to create more of a cross-fertilizing ecosystem between bikeshare and ride-hail, but didn’t go into details. That side of the company is also expected to see some cutbacks as it gets “leaner and more focused,” according to an April blog post from the company.

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