Lyft shares jumped up more than 60% on February 13, 2024 after an error in the company’s earnings release exaggerated its would improve adjusted earnings margins outlook by 500 basis points in 2024 compared to the prior year. Shares then dropped after CFO Erin Brewer said on the earnings call that the increase would be 50 basis points – a correction from the earlier issued earnings release. A ten fold margin improvement is improbable for any business, particularly over the short term. With an obvious mistake in the earnings release, investors were still trading with decent volume before, during and after the error. The question here is who was trading on an obvious typo.
Per the FT’s Alphaville: Below (per Bloomberg) is the post-close price and volume. It shows a slightly fishy 1mn shares traded in the moments before the Lyft release dropped, followed by another 2mn exchanged in the minutes before the conference call, after which there’s a near-3mn dump once the correction was issued.
https://www.ft.com/content/6f1d2323-4b18-44b6-b13c-7eab43f4ff83