Lyft stock drops amid Q1 earnings beat

Yahoo Finance Live examines shares of ride-share service giant Lyft following its first-quarter earnings report.

Video transcript

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- Breaking out from Lyft here. You can see shares off just about 11% in extended trading. TCU revenue guidance coming in a bit light. That is really driving the action in after hours trading.

Active riders coming in at 19.6 million. That was up nearly 10% on a year-over-year basis, slightly below what the Street was looking for. But revenue per active rider, that was up 4% on a year-over-year basis coming in above. The Street's expectations at $51.17.

In terms of some of the Q1 numbers, Q1 sales also be coming in better than expected there. In this release, CFO Elaine Paul, saying that ride share ride growth accelerated here in this quarter on a year-over-year basis for the first time in nearly two years. But that light to Q sales outlook is really what's weighing on shares here in extended trading Akiko with the stock off just about 15%.

- Yeah. And Lyft inevitably compared against its rival Uber. Certainly looks like the numbers were better on Uber's part there. But it has been the long haul here when you think about the company having to go with that turnaround. I mean, you know what we've heard, if you want to take from Lyft, but also from Uber , ride hailing is starting to come back. People are returning to work. There are more use cases going up there.

But Lyft's business simply just isn't as diversified as Uber. So when you think about where they are right now, it really does ride. No pun intended largely on their business within the ride hailing side. And that's why we are seeing that stock at least down nearly 14% right now in after hours.

- And Akiko, when you take a look at the fact that they reported fewer than expected active riders on the platform. This is certainly points to a sign that some of the lower fares, which we know has been the strategy here by Lyft in order to really remain competitive with Uber in an effort to win back some of that market share that they have lost over the past few years. That some of those efforts are falling short.

We also know Lyft has been under a tremendous amount of pressure in order to cut costs. They have done so. They just recently announced a pretty substantial layoff there of their workforce.

And in this report, Elaine Paul, the CFO, saying, that we've moved decisively to cut our operating costs. And we'll use the savings to pay for continued service level improvements in the near term.

But you're right. They're up against Uber, which has a much more diversified business with Uber Eats, which has really been able to separate them from Lyft right now. Lyft certainly has an uphill battle. They have a new CEO in place, who has made a number of changes since taking the helm. But similar to some of the other companies, we talk about, that turnaround strategy really regaining some of the momentum that they lost might take a little bit more time.

- Well, and then that transition that we've seen over the last year or so, which is going from high growth to really profitability, which is exactly what investors are looking for. Certainly not liking the numbers that have come out at least for now.