Another stock gets added to my Imploded Stocks column.
By Wolf Richter for WOLF STREET.
Shares of Lyft got shookalacked in afterhours trading today after the company reported Q1 earnings – another huge loss, this time $197 million, bringing the total loss over the past five years to $7.1 billion, which takes a lot of doing for a taxi enterprise to be losing such piles of money.
Shares started plunging as the executives were discussing their outlook, and by the time they got done jabbering, the stock [LYFT] had plunged 26% to $22.85, back into the neighborhood of the March 2020 low, and down 74% from the high, which was the artificially hyped fake share price right out the gate on the first day of trading in March 29, 2019. And so now, Lyft has earned itself a place on my rapidly growing list of Imploded Stocks (data via YCharts).
This mess comes a week after Lyft had restated its 2021 results. In the April 29 filing with the SEC, Lyft said that an “accounting error” had occurred in its reporting for 2021, with the result that the loss was understated, and the actual loss for the year was increased to $1.06 billion.
The first day of trading was a classic hype-and-hoopla operation, staged by Wall Street firms to pull a bag over investors’ heads, or at least allow them to think that there would be a greater fool out there that they could sell those misbegotten shares to. But the company has by now lost $7.1 billion and continues to lose piles of money, and continues to thackamuffle its investors.
The hype-and-hoopla at the IPO on March 29, 2019, was huge, and the stock didn’t start trading until noon, but it didn’t last long. Just about instantly, the shares began to tank, dropping 10% during the first day, actually just during the first four hours, the beginning of an epic long hard decline that now amounts to 74%.
This is the chart I used on March 29, 2019 to depict the first day of trading:
During the call with analysts today, executives saw revenues for Q2 that were shy of the expectations, and they saw an “adjusted EBITDA” – a homemade metric of positive cashflow when in fact the company is losing a ton of money – of $10-$20 million when Wall Street analysts were expecting on average $83 million of “adjusted EBITDA.”
Lyft said all the wrong things. The number of riders it said it had during the quarter fell short of expectations and worse, they were down from Q4. And to attract and retain drivers, it paid out heavily on driver incentives, and worse, it said that it would pay out even more for driver incentives.
Like Uber, Lyft operates a taxi enterprise that cannot make money under GAAP and wasn’t designed to make money under GAAP but was designed to bamboozle investors with revenue growth and homemade metrics – and now it turns out, even those have been falling short.
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