Wall Street has had a volatile week, and investors seemed ready for the weekend on Friday. Although other stock market indexes moved higher, the Nasdaq Composite (^IXIC -0.52%) was stuck in the red, losing more than 1% at noon ET.
A couple of high-profile stocks weighed on investor sentiment on the Nasdaq. Lyft (LYFT -3.47%) shares plunged following the ride-hailing service's latest financial report, with shareholders worried about the company's competitive position in an increasingly challenging space. Meanwhile, Expedia Group (EXPE -0.33%) also suffered declines even as the travel industry has hoped that conditions would return to normal with more countries easing up on pandemic-related restrictions.
Lyft heads back toward multiyear lows
Shares of Lyft plummeted 36% at midday on Friday as investors responded negatively to the company's fourth-quarter financial report. The move took the stock price back down toward its lowest levels since its early 2019 IPO.
Lyft's results showed some recovery from weakness in recent years but also included huge losses. Revenue of $1.18 billion was up 21% year over year. However, losses more than doubled to $588 million, and even after making allowances for certain items, adjusted pre-tax operating losses of $248 million were far worse than the $48 million in losses during the year-earlier period. The bulk of the losses were due to a $375 million provision to strengthen insurance reserves and other accrued and current liabilities.
Fundamentally, Lyft's business saw slowing gains. Year-over-year active rider counts were up 9% to 20.36 million, but that was only 46,000 higher than three months ago. Meanwhile, per-rider revenue moved sharply higher, rising 11.5% from year-ago levels.
Investors also weren't satisfied with tepid guidance, with Lyft projecting just $975 million in revenue for the first quarter. In light of better performance from rival Uber Technologies (UBER -0.89%), Lyft shareholders seem increasingly nervous about the competitive dynamics in the industry.
Expedia bounces back, but investors aren't satisfied
Expedia Group's stock also suffered a setback on Friday, with shares down about 8% at midday. The online travel specialist saw sizable gains in key business metrics for the fourth quarter of 2022, but that wasn't enough in the eyes of most of its shareholders.
Key metrics for Expedia were largely higher. Revenue rose 15% year over year to $2.62 billion as gross bookings posted a 17% gain. Room-nights booked weighed in at 70.8 million, up 19%, and that helped contribute to a 17% rise in adjusted net income to $196 million. That produced earnings of $1.26 per share on an adjusted basis.
Expedia gets almost all of its revenue from lodging-related services, and the company enjoyed an 18% rise in revenue for lodging in the fourth quarter. Full-year gains of 38% were even more impressive, showing how much progress the industry has made since 2021 as travelers have returned to the road. Expedia also managed to post a 15% rise in advertising and media revenue, which was pretty impressive in a weak ad market.
Much of the weakness for Expedia came amid weather-related travel disruptions late in the period, and most industry watchers foresee better conditions for the travel industry in 2023. That could make the drop in Expedia's stock a temporary phenomenon. It will be interesting to see if the online travel platform provider can take full advantage if travelers are able to overcome concerns about a recession and keep their vacation plans intact over the course of the year.
