Uber, Lyft shares soar despite earnings typo, as ridership sets records


Uber and Lyft saw their stock values soar Wednesday as both companies signaled that they are finally making money amid a surge in ridership.

Uber stock rose more than 14 percent Wednesday after the company announced a $7 billion share buyback. Lyft gained over 35 percent after a typographical error spurred wild after-hours trading the night before.

“We have seen a massive turnaround for the likes of Uber and to a lesser extent Lyft over the last 18 months,” Wedbush senior analyst Dan Ives said.

The companies are being rewarded for their focus on profits, according to Evercore ISI analyst Mark Mahaney. Gone are the days when technology investors reward a growth-at-all-costs mind-set, he said.

Uber Chief Financial Officer Prashanth Mahendra-Rajah described “a vote of confidence in the company’s strong financial momentum.” The company last week reported its first-ever profitable year.

Shares of Lyft briefly rocketed more than 60 percent Tuesday when the company issued an earnings report that included an extra zero in its profit-margin forecast for a metric known as earnings before taxes, interest, depreciation and amortization. The company later clarified that it expects that metric to increase by 0.5 percentage points for the year, not the five percentage points initially reported.

“That was a bad error, but it was one zero in a press release,” Lyft CEO David Risher told Bloomberg Television.

Despite the mistake, investors sent Lyft higher when the market opened Wednesday because the company expects to generate positive cash flow for the first time, analysts said. Even the corrected margin forecast for adjusted earnings shows that the company is taking a bigger slice of each ride than it has in the past, and executives expect further improvement in 2024.

The rosy projections come as drivers with Uber, Lyft and DoorDash complain that the companies are taking a growing cut of fares. Drivers in at least 17 cities staged a 24-hour strike Wednesday to demand a living wage and transparency over how pay is calculated.

The ride-hailing companies’ gains came as the broader stock market stayed muted. The Dow Jones Industrial Average rose 0.4 percent Wednesday, while the S&P 500 and tech-heavy Nasdaq composite index gained almost 1 percent and 1.3 percent, respectively. Stocks had sold off the day before on hotter-than-expected inflation data.

Lyft reached the highest annual ridership count in its history at roughly 700 million rides as revenue grew 8 percent year-over-year to $4.4 billion. Executives said the company got a financial boost from adding video advertisements into its app, which launched in the fourth quarter of 2023.

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Uber and Lyft once struggled with driver shortages but have experienced a turnaround over the past 18 months as drivers and riders alike returned, Ives said. Data shows that more companies are paying for employees’ rides, Ives said, a trend that now accounts for about 15 percent of rides each week. Travel has also improved, Ives said.

“Drivers were a major shortage issue but now have come back to the platform in masses, which has been the flex-the-muscles moment for Uber,” Ives said.

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Having more drivers and riders has led to a sort of “network effect” that has strengthened Uber especially, Mahaney said. “The more drivers on the network, the more attractive the network is for riders, because the service gets better,” he said.


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