Lyft mishap 'another credibility issue': Analyst
Shares of Lyft (LYFT) fell Wednesday after a "clerical error" in their earnings results caused the stock to rally 60% in after-hours trading on Tuesday. Wedbush Securities Managing Director and Senior Equity Analyst Dan Ives says the mistake was "a black eye for Lyft," overshadowing the company's actual progress.
Ives tells Yahoo Finance Live the error showcased "another credibility issue" for Lyft despite efforts to boost growth. As Lyft aims to expand, earnings showed it remains the "little brother of Uber (UBER)" struggling to increase margins, per Ives.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Angel Smith
Video Transcript
RACHELLE AKUFFO: We are also watching Lyft shares higher in premarket trading. But, of course, they've pulled back significantly after soaring more than 60% on a clerical error. The ride-hailing company's original release stated it was expecting profit margins to expand 500 basis points before correcting this to 50 basis points during its earnings call, saying this was a clerical error.
Well, for more on these results, we're joined by Dan Ives, Wedbush Securities managing director and senior equity analyst. Good to have you on, Dan. So, in terms of your reaction to this accidental typo, and the reaction that we saw in the markets here, I know you've had some choice words about an error like this.
Clearly, it has to pass through a lot of hands. A lot of eyes get to see these things before it goes out. What does this signal to you?
DAN IVES: Look, this is a Ted Stryker "Airplane!" moment. I mean, you know, if you look at this, it's a black eye for Lyft. And even though these were good numbers and a step in the right direction, this has really been a comedy show the last few years. And it's just another, I think, credibility issue that we've seen. Again, just a shock. I've never seen anything like it in 25 years.
BRAD SMITH: Does that credibility issue impact the invest worthiness of Lyft from your perspective, Dan?
DAN IVES: I mean, if a pilot lends in the wrong airplane, and he lands and then all of a sudden he lands in the wrong destination, do you question that team? I mean, look, that's the fundamental issue.
And at the same point, you have Uber, just another flex-the-muscles moment. Look at what's happening there. I mean, now, obviously, a buyback. Lyft continues to be the little brother of Uber.
RACHELLE AKUFFO: And so, Dan, with that in mind, obviously, Lyft is still pushing back on expanding in the way that Uber has in terms of expanding its services, staying at really this pure play. What do you think is going to be the key then to become perhaps a bigger brother than it already is, especially when you look at things like some of the partnerships it has?
DAN IVES: Yeah, I mean, look, partnerships, I mean, you look at autonomous, you look at some expansion into some other areas. But the fundamental problem is that they have to expand margins. Obviously not 500 bips, 50 bips. I mean, it definitely feels like they're in that direction. They got to prove it. This can't just be a one step forward, two steps back.
They have to execute. It definitely was a step, but look, this is also overshadowed by almost a historical error in terms of what we saw. So this is going to be another prove me. But at least for now, they're going to be at the little kids' table at Thanksgiving.
