- Lyft plunged 36% on Friday after the company posted a disappointing Q1 revenue forecast.
- The ride-hailing brand expects $975 million in revenue during the period, missing estimates of $1.09 billion.
Lyft slumped 36% on Friday — its biggest-ever decline — after the ride-hailing giant posted weak forward guidance.
The company said it expects to generate around $975 million in revenue during 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, badly lagging the $83.6 million consensus estimate from Bloomberg.
"Our Q1 guidance is the result of seasonality and lower prices, including less Prime Time," CFO 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: "Additionally, our different insurance renewal timing puts differently timed pressure on our P&L. We are not waiting for that to normalize to achieve competitive service levels. We are focused on driving greater growth and profitability."
There were some bright spots in the earnings release.
Lyft exceeded Wall Street's expectations for fourth-quarter revenue at $1.18 billion, compared to estimates at $1.16 billion, according to Refinitiv. Revenue jumped 21% year-over-year. The company also notched 20.4 million riders in the quarter, its highest number in almost three years.
This didn't stop analysts from raising concerns, with Wedbush Securities downgrading Lyft's stock from outperform to neutral. The firm also lowered its price target from $17 to $13.
"In 22 years on the Street as a tech analyst we have listened to [thousands] of conference [calls] with many highs and lows. Last night's Lyft call was a Top 3 worst call we have ever heard," Wedbush analysts Daniel Ives and John Katsingris wrote in a Friday note, adding the company's business model faces an "Everest-like uphill climb to show growth."
Lyft is up against fierce competition in the rideshare market from Uber, which reported its strongest quarter ever this week with revenue up 49% year-over-year. Shares of Uber fell 4.4% on Friday.
'[It is] a winner take all rideshare market with Uber the winner and Lyft looking like the major loser with a murky path forward," Wedbush analysts wrote. "M&A would be the best path in our opinion although likely financial buyers are scarce for now."