Lyft continues to lag behind competitor Uber as disappointing forecasts erode investor confidence.
Shares in the ride-hailing company plunged more than 30 per cent this week after it reported a lower than expected profit of $975m (£805m) in the first quarter. It was initially estimated by analysts to be $1.09bn (£900m), according to Refinitiv data.
Lyft announced its first quarter earnings before interest, taxes, depreciation and amortization (EBITDA) of between $5m and $15m, a decrease from the S&P Capital IQ analyst forecast of $85m.
The firm lost nearly $2 billion in market capitalization following the drop in share price.
Lyft chief financial officer Ellen Paul explained that the updated guidance is a result of “lower prime time, including seasonality and lower prices”. Shorter prime time means fewer peak hours which are often more expensive due to increased demand.
In its fourth quarter trading update, Lyft also reported 20.3m active users, up 8.7 per cent on the same period last year. Annual revenue grew 21 percent to $1.2 billion over the previous year.
“In the fourth quarter, we achieved the highest revenue in our company’s history and outperformed our guidance for adjusted EBITDA, excluding the actions we took to strengthen our insurance reserves,” Paul said.
Lyft is now “focused on driving greater growth and profitability”.
Investors compared Lyft to Uber, which posted its best quarter ever on Wednesday, and which exceeded analyst predictions. Their revenue was up almost 50 percent year over year and they set a new record of over two billion visits in a single quarter.
According to Lyft co-founder and CEO Logan Green, “the improved market balance we see today creates significant opportunities for long-term profitable growth”.
“To take advantage of this opportunity we must ensure competitive service levels. Strengthening our competitive position, meeting higher demand and reducing our fixed and variable costs will best position us to deliver strong shareholder returns, ” They said.