The shares of Lyft are down by more than 27% during Wednesday’s pre-market trading session.
The shares of ride-hailing company Lyft has declined by more than 27% over the past few hours. The dip came after the company provided its revenue guidance for the second quarter of the year.
For the second quarter of 2022, Lyft said it expects revenue between $950 million and $1 billion. However, these figures are below Wall Street’s estimation of $1.02 billion.
The price decline is the lowest Lyft has experienced since October 2020, during the height of the Coronavirus pandemic. Lyft presented its first-quarter earnings report on Tuesday.
According to the company, revenue for Q1 was $876 million, which surpassed Wall Street’s estimation of $846 million. The earnings per share were 7 cents adjusted vs the loss of 7 cents expected in a Refinitiv survey of analysts.
Lyft reported 17.8 million active riders, narrowly missing estimates. The number of drivers on the platform has declined from the 18.73 million active riders it reported in the end of the fourth quarter of 2021.
The ride-hailing company had to spend a huge amount of money on driver incentives during the Covid pandemic and recovery. The investment had negatively affected the company’s financials over the past few quarters.
The recent gas price hike due to the ongoing war in Ukraine has seen investors fear that drivers would leave their respective platforms and Lyft and the others would have to increase their incentives.
These factors contribute to the shares of Lyft experiencing a huge decline over the past few hours. Uber, Lyft’s major competitor is also suffering from a slump as it has lost more than 3% of its value over the past few hours.
It remains unclear how much incentives the ride-hailing companies are willing to spend to retain drivers over the coming months.