Lyft plunges over 30.0% in pre-market on gloomy outlook

Lyft (LYFT.US) shares tumbled more than 30% before the opening bell after the ride-hailing company issued weak Q1 guidance, which overshadowed better than expected Q4 revenue figures. Company plans to reduce prices and claw back market share lost to larger rival Uber Technologies (UBER.US), which posted upbeat quarterly results on Wednesday.

• Adjusted loss per share: 74 cents vs expected earnings of 13 cents 

• Revenue rose 21.05 YoY to $1.18 billion, vs. $1.16 billion, according to analysts surveyed by Refinitiv

Within the last three years Lyft's revenue growth was not very impressive, averaging 8.19% annually. Source: BarChart

• Quarterly loss was mainly caused by increase in insurance reserves, and a change in the way the company accounts for those reserves.

• Company recorded 20.3 million active riders in Q4, below estimates for 23 million, effectively flat from the Q3 but up 8.7% year over year.

Over the last two years the number of Lyft's paying users, a key usage metric for the company, rose 28.2% annually to 20.4 million users, which is an optimistic sign. Source: BarChart

However while the number of active users is rising, it has not reached pre-pandemic levels. Source: Bloomberg

• Factors pressuring the company's profits include lower prices, seasonality and changes in insurance renewal timing, Lyft Chief Financial Officer Elaine Paul said on Thursday.

• "This is obviously not the level of growth or profitability we are aiming for or capable of. And we are laser-focused on driving additional growth and managing costs," said CEO Logan Green

• "To take advantage of this opportunity and grow the market, we must prioritize competitive service levels," he added.

• Lyft expects revenue of roughly $975 million in Q1 2023, well below StreetAccount expectations of  $1.09 billion.

• Fresh financial figures and guidance added to earlier concerns that it was falling behind Uber (UBER.US) as both companies attempt to rebound from pandemic lows.

• "The more protracted Lyft's post-COVID marketplace rebalancing has become, the more concerned we have become with the company's ability to regain its prior category position," D.A. Davidson analyst Tom White said.

• "These results reinforce our thesis that Lyft is at a structural competitive disadvantage versus Uber in terms of market share, driver supply and expenses," RBC Capital Markets analysts said on Friday.

Lyft (LYFT.US) stock is on its way to open today's session with a massive bearish gap not far away from recent low at $9.50. Break below this level, could lead to acceleration of the downward move. On the other hand, if buyers manage to halt declines, then the nearest resistance to watch is located around $18.60, which is marked with the upper limit of the local 1:1 structure. Source: xStation5