Tyler Durden
"Tuesday, Feb 13, 2024 - 04:40 PM
For a perfect example of just how completely broken everything has become in this so-called market, look no further than LYFT which first exploded more than 60% on what can very generously be described as a modest beat to estimates... before it all came crashing down!
Here's what happened: Lyft reported Q4 results that were in line on revenue ($1.22BN up just 4% YoY and right on top of estimates of $1.22BN), and also a modest beat on EPS ($0.18, exp. $0.08); it also issued projections (which may very well be dead wrong), that just barely beat expectations: the company expects Q1 EBITDA between $50 and $55MM, and now sees Q1 gross bookings of $3.5-$3.6BN, also just above the $3.48BN estimate. Furthermore, in Q4, Lyft said the number of active riders on its platform increased 10% from a year earlier - more than double the rate of revenue growth so clearly it is failing to maximize its revenue upside - to 22.4 million.
All in all, a modest beat - even with clearly gamed guidance which the company can very well miss next quarter and just blame it on the recession - and one which normally would have been enough to push the stock a couple percent higher.
But not 60%! And yet, that's what happened because after closing at just over $12, the stock exploded as high as $20.25 after hours, rising a ridiculous 67%... before it plunged and wiped out all after hours gains...
... in just a few seconds as someone realized that none of this makes any sense...
LYFT +65%
These are not normal moves— zerohedge (@zerohedge) February 13, 2024"
... and decided to look at the investor presentation which spawned the insane move, and specifically the company's 'directional commentary' for 2024 where a number stood out: the company guidance for adjusted EBITDA margin expansion, which the company said would be 500 basis points year-over-year - instead of the 50 bps it had meant to write - which is clearly insane for a company that has struggled for years to break even to positive EBITDA. In fact, any normal carbon-based human would have looked at the number and realized it was an error... but not the armies of AI-enabled algos which took the number and ran with it, sending the stock 65% higher and adding over $3 billion in market cap to the company whose market cap was just $4.8 billion a few minutes earlier!
And then, about 40 minutes after the earnings presentation came out with the worst imaginable typo, the company admitted it had made an error:
Lyft CFO Corrects Press Release, Says Adjusted EBITDA Margin Expansion Will Be 50 Basis Points Y/Y In 2024, Not 500 Basis Points"
And that, ladies and gentlemen, is how you wipe out thousands of shorts, who are margin called and forced to cover in after hours trading... and then you blame it all on a typo.
Going forward expect every company that has been slammed by relentless shorting to issue guidance that strategically adds one or more zeroes to its revenue, EBITDA or EPS growth projections, adding billions in imaginary market cap thanks to idiot algos, then admitting it was all just one big misunderstanding."