Shares of Lyft fell about 15% in extended trading on Tuesday after the ride-sharing company reported fourth-quarter results that failed to reassure investors. On the surface, Lyft beat earnings expectations and matched revenue estimates. Underneath, however, softer ride metrics and cautious guidance overshadowed the numbers.
Here’s the thing: Wall Street was looking past accounting gains and focusing on demand. And that’s where the report stumbled.
Q4 Results: Beats That Didn’t Convince
For the fourth quarter, Lyft posted adjusted earnings of 16 cents per share, topping analyst expectations of 12 cents. Adjusted revenue came in at $1.76 billion, exactly in line with estimates.
But the quality of those earnings raised eyebrows. Lyft’s adjusted profit excludes a massive $2.9 billion benefit tied to the release of a valuation allowance on deferred tax assets. Strip that out, and the headline profitability looks far less impressive.
On a reported basis, revenue totaled $1.59 billion, up just 3% from a year earlier. That modest growth rate did little to calm concerns about the company’s ability to accelerate its core business.
Bookings Solid, Ride Activity Lags
There were some bright spots. Gross bookings rose 19% year over year to $5.07 billion, landing right where analysts expected. That suggests pricing and overall spend per user are holding up.
But actual usage told a different story.
Active riders reached 29.2 million in the quarter, missing the StreetAccount estimate of 29.5 million. Total rides came in at 243.5 million, well below the FactSet estimate of 256.6 million. For a ride-sharing platform, those misses matter. They point to slower demand momentum at a time when investors want proof of sustained growth.
Guidance Signals Near-Term Caution
Lyft’s outlook added to the pressure. The company expects adjusted EBITDA between $120 million and $140 million in the current quarter. Analysts were looking for roughly $139.8 million, putting Lyft’s guidance at the low end of expectations.
Management pointed to recent California legislation that reduced insurance costs, allowing for lower ride prices. While that should eventually boost demand, Lyft warned that adoption will take time and is likely to be weighted toward the second half of the year.
What this really means is patience. And markets aren’t always great at that.
Buybacks Announced, Questions Remain
In a shareholder-friendly move, Lyft’s board approved up to $1 billion in additional share repurchases. It’s a strong signal of balance-sheet confidence, but it wasn’t enough to offset worries about slowing ride volumes and near-term profitability.
Bottom line: Lyft delivered a quarter that looked fine on paper but shaky in substance. Until rider growth and trip volumes show clearer momentum, investors may remain cautious, regardless of accounting wins or buyback headlines.
