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Why Lyft Stock Fell 20% in February

By Demitri Kalogeropoulos - Mar 6, 2020 at 8:46AM

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Investors weren't happy to hear the rideshare giant's latest earnings outlook.

What happened

Shares of Lyft (LYFT 2.90%) underperformed a historically weak market last month as the stock dropped 20%, compared with an 8% decline in the S&P 500, according to data provided by S&P Global Market Intelligence.

The decline added to a tough run for the young ride-hailing company, whose shares are down over 50% since the initial public offering last year.

A woman waits by the road with her smartphone.

Image source: Getty Images.

So what

Investors weren't happy with Lyft's fourth-quarter report, issued on Feb. 11. Yes, the company beat its revenue targets again, this time by logging a 52% sales increase as active ridership rose 23%. Revenue per active rider logged a similar increase.

But investors chose to focus on the fact that net losses are still growing. Lyft generated $2.6 billion in red ink in 2019 versus $900 million a year earlier.

Now what

CEO Logan Green and his team are predicting that losses will continue through 2020, but that the scale will moderate. That outlook sets it apart from rival Uber, which is aiming to achieve breakeven on an adjusted profit basis sometime this year. For now, Lyft appears more willing to accept short-term losses in its market share battle.

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