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Lyft is trailing behind competitor Uber as disappointing forecasts have caused investors to lose confidence.
Shares in the ride-hailing company dropped more than 30 percent this week after it reported lower than expected first quarter profit forecasts of $975m (£805m). Initially, analysts forecasted it would be at $1.09bn (£900m), according to Refinitiv data.
Lyft also announced its first-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) to between $5m and $15m, a decrease from S&P Capital IQ analyst predictions of $85m.
The firm lost almost $2bn in market capitalization after the share price drop.
Elaine Paul, chief financial officer of Lyft, explained that the renewed guidance is a consequence of “seasonality and lower prices, including less Prime Time”. Less Prime Time means fewer peak hours that are often cost riders more due to a surge in demand.
In its fourth-quarter trading update, Lyft also reported 20.3m active users, an 8.7 per cent increase from the same time last year. Annual revenue increased 21 per cent to $1.2bn from the previous year.
“In Q4 we achieved the highest revenues in our company’s history and we outperformed guidance on Adjusted EBITDA excluding the action we took to strengthen our insurance reserves”, Paul said.
Now Lyft are “focused on driving greater growth and profitability”.
Investors contrasted Lyft to Uber, who posted its best quarter ever on Wednesday, and which surpassed analyst predictions. Their revenue was up nearly 50 per cent year on year and they hit a new record of over two billion trips in a single quarter.
According to Logan Green, co-founder and chief executive officer of Lyft, “the better marketplace balance we see today creates significant opportunities for long-term profitable growth”.
“To take advantage of this opportunity we must ensure competitive service levels. Reinforcing our competitive position, servicing more demand and reducing our fixed and variable costs will put us in the best position to deliver strong shareholder returns,” he added.
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