Sunday, April 14, 2024

Lyft error sparks Wall Street chaos

Under Risher, Lyft has cut hundreds of jobs since late 2022 as part of a restructuring, including positions in corporate communications, policy and employee operations.

The mistake overshadowed what was otherwise a solid beat on profit and bookings projections that signalled a years-long effort to boost ridership and challenge Uber may be paying off. Lyft’s shares were up 31.1 per cent in mid-afternoon trade in New York, the most in almost four years.

It’s a “black-eye moment” for Lyft, said Dan Ives, an analyst at Wedbush Securities.

It’s a “black-eye moment” for Lyft, said Dan Ives, an analyst at Wedbush Securities.Credit: AP

In fact, both Lyft and Uber delivered strong earnings reports this quarter, suggesting continued growth in overall rider demand since a nationwide plunge during the pandemic. The two have spent fiercely to recruit and retain enough drivers to meet the rise in orders. Risher, who took the helm less than a year ago, has focused the operations on customer satisfaction and has emphasised a return to the basics in an effort to close the gap with Uber. Lyft has spent millions of dollars to lure drivers but has had a hard time boosting its rider base.

Lyft said the number of active riders on its platform increased 10 per cent in the fourth quarter from a year earlier to 22.4 million. Last year, Lyft had more than 40 million riders, the highest annual ridership in its history.

“We’ve entered 2024 with a lot of momentum and a clear focus on operational excellence,” CFO Brewer said, positioning the company to “drive meaningful margin expansion and our first full-year of positive free cash flow.”

‘Never seen an error like this in my almost 25 years on the Street.’

Wedbush Securities analysts Dan Ives

But Lyft still lags behind Uber. According to market research firm YipitData, the company has held around 30 per cent of the US rideshare market compared with 70 per cent for Uber since the second quarter of 2022. Last week, Uber reported its full year of profit as a public company and said trips rose 24 per cent in the quarter to 2.6 billion.

Like many areas of the US economy, Lyft also saw a Taylor Swift bump. High-attendance stadium events such as concerts by Swift and Beyonce, the US Open and football games helped boost rides by 35 per cent, Lyft said.

As part of efforts to retain drivers and promote pay transparency, Lyft earlier this month said drivers will earn at least 70 per cent of the amount that riders pay each week, excluding external fees.

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But workers say it doesn’t go far enough. Drivers for Uber and Lyft were striking on Valentine’s Day, to call attention to low pay and what they claim is poor treatment by the app companies, according to a coalition representing drivers.

Bloomberg

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