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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Lyft shares slump despite an improved outlook

Shares in the ride hail company climbed 22% then fell to close all-sessions down 1%.

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While the second quarter (Q2) beat and the outlook for Q3 was also an improvement, the CEO said rides receiving prime-time charge, or surge pricing, fell 35% sequentially in the second quarter, while the average per-mile fare was 10% lower year-over-year.

(Video Transcript)

Lyft Q2 earnings

Lyft, the popular ride-sharing company, recently released its second quarter (Q2) earnings, and the results were better than expected. While analysts predicted a loss of 17 cents per share, Lyft actually earned 16 cents per share, which is great news. The company's revenue for the quarter was also on target, coming in at $1.02 billion.

Looking ahead, Lyft is feeling positive about the future. They anticipate third quarter (Q3) revenues of $1.13 to $1.15 billion, surpassing the analyst consensus of $1.09 billion. They attribute this optimism to their focus on reducing costs and the expected increase in ride-sharing demand as the pandemic subsides.

Share price reaction

After the earnings announcement, Lyft's stock price initially soared to levels it hadn't seen since February. However, it quickly took a nosedive due to some concerning factors. The CEO shared that the number of rides with surge pricing (when prices increase during high-demand periods) dropped by 35% compared to the previous quarter. This had a significant negative impact on the company's earnings. Furthermore, the average fare per mile decreased by 10% compared to the previous year.

As a result of these disappointing factors, Lyft's stock price experienced a substantial decline. It ended extended trading down 1.33% and was expected to start the next trading session with further losses.

Investors were worried about the decrease in surge pricing rides and the decline in average fares since these are important factors that contribute to Lyft's profitability.

In conclusion, even though Lyft exceeded earnings expectations and provided positive revenue guidance, the stock price took a hit due to the decrease in surge pricing rides and lower fares. The company will need to address these challenges in order to regain investor confidence and ensure long-term profitability.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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