Lyft plunged as much as 37% on Friday after the company released a disappointing first-quarter revenue forecast. The rideshare brand forecasts $975 million in revenue during the period, missing estimates of $1.09 billion. Elsewhere, Uber posted its best quarter ever with revenue up 49% year over year. Something is loading.
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Lyft fell 37% after the ride-hailing giant issued a weak forecast, sending the company to its worst trading day since its 2019 IPO.
The company said it expects to generate about $975 million in revenue in the first quarter of 2023, missing analyst estimates of $1.09 billion. It also provided an adjusted EBITDA forecast of $5 million to $15 million for the same period, well behind ‘s consensus estimate of $83.6 million.
“Our guidance for the first quarter is the result of seasonality and lower prices, including less Prime Time,” chief financial officer Elaine Paul said in a statement, referring to the period when rides are more expensive. because there are more passengers than Lyft drivers.
Paul added: “In addition, our different insurance renewal schedules put different pressure on our P&L. We are not waiting for this to normalize to achieve competitive service levels. We are focused on driving growth and profitability.
There were a few bright spots in the release of the results.
Lyft beat Wall Street expectations for fourth-quarter revenue at $1.18 billion, versus estimates of $1.16 billion, according to Refinitiv. Revenue jumped 21% year over year. The company also saw 20.4 million passengers in the quarter, its highest number in nearly three years.
That didn’t stop analysts from raising concerns, with Wedbush Securities downgrading Lyft’s stock from outperform to neutral. The company also lowered its price target from $17 to $13.
“In 22 years on the streets as a technology analyst, we’ve listened [thousands] conference [calls] with lots of ups and downs. Last night’s Lyft call was one of the 3 worst calls we’ve ever heard,” Wedbush analysts Daniel Ives and John Katsingris wrote in a Friday note, adding that the company’s business model makes facing an “Everest-like uphill climb to show growth”.
Lyft faces fierce competition in the ride-sharing market from Uber, which reported its best quarter this week with revenue up 49% year-over-year. Uber shares fell about 5% on Friday.
‘[It is] a winner takes all of the ridesharing market with Uber the winner and Lyft looking like the big loser with an obscure path,” Wedbush analysts wrote. “Mergers and acquisitions would be the best path in our view, although likely financial buyers are rare at the moment.”