A Press Release Mishap
Prompted by a press release discrepancy that was quickly corrected, shares of Lyft (NASDAQ:LYFT) soared more than 60% after the bell Tuesday before falling back to the unchanged line in a matter of minutes.
Postmarket Chaos
The chaos ensued after the company reported earnings postmarket, with traders initially focusing on forward guidance that included a prediction of positive free cash flow in 2024.
Notably, the press release issued at 4:05 p.m. ET included guidance of “Adjusted EBITDA margin expansion (calculated as a percentage of Gross Bookings) of approximately 500 basis points year-over-year.”
Soon afterwards, social media posts noted that Lyft’s CFO had corrected that to 50 basis points. A Lyft spokesperson confirmed that the original press release was in error and the correct figure was 50 basis points.
As of 5:30 p.m. ET, the earnings release on Lyft’s site had not been removed or corrected.
Volatility and Aftermath
After the initial surge, volatility declined and LYFT is higher by 18%, near $14.30. However, shares had traded as high as $20.03 before sinking to $12.71 seven minutes later.
Algorithmic trading may have exacerbated the postmarket move, reacting to the 500-basis-point margin forecast. Lyft has short interest of 13.47%.
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