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Thursday, May 19, 2022

Lyft shares drop 33% on disappointing steerage

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Lyft President John Zimmer (R) and CEO Logan Green converse as Lyft lists on the Nasdaq at an IPO occasion in Los Angeles March 29, 2019.

Mike Blake | Reuters

Lyft shares plunged 33% Wednesday as buyers anticipate short-term headwinds to weigh on the corporate.

Lyft reported better-than-expected outcomes on each the highest and backside strains after the bell on Tuesday. But the corporate offered mild steerage for the second quarter and mentioned it must maintain spending on driver incentives as a consequence of surging gasoline costs, sending shares tumbling. It’s unclear how a lot the corporate plans to speculate or whether or not it might proceed into the second half of the yr.

The firm may even spend on market tech and model advertising.

“We believe the softer near-term outlook, need to increase investments, and numerous macro headwinds are likely to weigh on shares in the near-term, causing us to move to the sidelines,” Susquehanna analysts mentioned in a notice Wednesday that downgraded the inventory.

Still, some analysts mentioned in notes following the report that the sell-off was overblown.

“There’s no room for error in this environment, but still, this selloff seems overdone,” Piper Sandler analysts mentioned in a Tuesday notice. “We can understand why the stock is lower following the Q1 call (namely: disappointing EBITDA guidance), and we are cutting our price target to reflect sector-wide multiple compression and lower conviction re: margins. But still, we would buy this post-Q1 weakness,” the analysts added.

Canaccord Genuity mentioned in a notice Tuesday that, whereas tempered income and outlook is weighing on shares, “the demand picture is clearly improving along with driver availability.”

“This marketplace balance will likely drive prices lower, volumes higher, and lead to robust growth for the balance of the year, a dynamic that should help the stock appreciate out of COVID-inflicted value territory,” the analysts mentioned.

— CNBC’s Michael Bloom contributed to this report.

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