Investors were on edge on Wednesday morning, impatiently waiting for the latest news from the Federal Reserve about how it plans to handle monetary policy. With so much at stake, market indexes were largely in a holding pattern. At 11:30 a.m. ET, the Dow Jones Industrial Average (^DJI -0.65%) was up 25 points to 33,154. However, the S&P 500 (^GSPC -1.20%) had dropped 14 points to 4,164, and the Nasdaq Composite (^IXIC -1.79%) was off by 177 points at 12,387.
As you can see from the Nasdaq's performance, many of the tech stocks that have taken big hits in recent months were again on the list of decliners. However, a couple of other companies stood out for seeing notable drops in their share prices. Ride-hailing specialist Lyft (LYFT -4.16%) was a major casualty, but disappointment from restaurant operator Brinker International (EAT -0.49%) also ate into investor sentiment. Below, you'll find more on both companies and what they said about their respective businesses.
No lift for Lyft
Shares of Lyft plunged more than 33% on Wednesday morning. The ridesharing company's first-quarter financial results fell far short of what investors had wanted to see.
Image source: Getty Images.
At first glance, many of Lyft's numbers seemed encouraging. Revenue of $876 million was up 44% from year-ago levels. Adjusted net income of $24.6 million reversed a big $114 million loss in the year-earlier period. Active riders were up more than 4.3 million over the past 12 months to 17.8 million, and revenue per active rider rose 9% year over year.
However, nearer-term trends weren't as positive. Revenue was down 10% from the fourth quarter of 2021, and adjusted net income was down by nearly a quarter. Active rider counts were down by more than 900,000 compared to the end of December 2021, and per-rider sales took a step backward from where they were three months ago.
Indeed, Lyft anticipates that higher costs to keep drivers will bring adjusted pre-tax operating earnings down sharply in the second quarter as higher gasoline prices weigh on what drivers are able to clear as profit from their Lyft work. The return of shared rides might help, but investors seem unclear on whether the ride-hailing industry will be able to sustain its current business model.
Brinker cools off
Shares of Brinker International also moved sharply lower, falling 18%. The parent of the Chili's restaurant chain saw increasing sales in the fiscal third quarter, which ended on March 30, but the cost environment is creating challenges across the industry.
Brinker's numbers looked reasonably solid. Revenue was up 18% year over year to $961 million, with a 15% rise in sales at Chili's and a 50% jump for the Maggiano's restaurant concept. However, operating income was down slightly from year-ago levels, as operating margins at the restaurant level dropped from 13.9% a year ago to 12.2%. Earnings rose more than 10% to $0.81 per share, with reduced income tax provisions and a drop in interest expense helping to contribute to a better bottom line.
However, Brinker's guidance wasn't entirely optimistic. The company still sees revenue for the full 2022 fiscal year coming in between $3.75 billion and $3.85 billion, which matches its previous range. However, between macroeconomic and pandemic-related impacts, Brinker now sees adjusted earnings of $3.05 to $3.30 per share, down from its previous forecast of $3.50 to $3.80 per share.
Food inflation, labor pressures, and a host of other factors are hurting not only Brinker but restaurants across the industry. There's no clear solution in sight, but many are hoping whatever the Fed does will be enough to make those problems diminish.
