Investors on Wednesday appeared to shake off a huge financial reporting error by the ride-hailing company Lyft, boosting shares 37 percent higher.
The company released materials on Tuesday that indicated it was expecting a 500 basis point increase in its adjusted earnings margin for 2024. Later the company said that this was a mistake and it only expected a 50 basis point gain.
A basis point is one-hundredth of a percentage point. So the company had initially said it was expecting a five percent adjusted gain and then corrected this to say it was expecting just a 0.5 percent increase.
Shares soared in extended trading Tuesday evening after the initial, incorrect figure was released, jumping by more than 60 percent. When Chief Financial Officer Erin Brewer announced the “correction” during the firm’s earnings call, most of those gains were erased.
But not all of them. Shares were still indicated up by about 15 percent after the correction.
Investors appear not to see the error as evidence of a deep problem with management or controls at the company.
Wedbush Securities analyst Dan Ives says the mistake was “a black eye for Lyft” and created “another credibility issue” for the company, Yahoo Finance reported.
Investors must like the look of that shiner.
The company’s quarterly revenue and bookings beat Wall Street expectations and its guidance was ahead of expectations even after the overstatement was clawed back.