It was a nightmare scenario that would set the hairs of any IRO on end: an earnings release sent out with an incorrect number in it – inaccurate to an order of 10 – that required a hasty walk-back from the company CFO and caused an overnight 60 percent surge in share price.
This was Lyft’s wild ride this week, when the US ride-hailing app told investors it expected profit margins to expand at a rate far higher than was real. Investors were excited to see a projected 500 basis-points expansion in 2024 for profits as a percentage of bookings. Unfortunately, as CFO Erin Brewer later confirmed on a call, the actual increase would be a more modest 50 basis points.
The debacle prompted sympathy from other financial communications professionals. Tesla’s head of IR Martin Viecha described it as ‘definitely the number one nightmare of any IR person’, adding that it gave him ‘chills’ to read about.
The press had a field day with the news. ‘Lyft out of order’, the Financial Times reported, while the paper’s Alphaville blog quickly rushed to offer merchandising opportunities. The Times described a ‘bumpy ride’, while Reuters conservatively described the move as a ‘blunder’.
The incident was a headline-grabber but those who have been in IR for some time may recognize that having to update a release is not a completely uncommon event. In fact, there have been several instances of companies having to update earnings press releases in the last few months alone.
According to data from AlphaSense, there have been at least seven since October: Beacon Roofing Supply, Tradeweb Markets, HCA Healthcare, Herc Holdings, Westlake Chemical Partners, TotalEnergies and Western Alliance Bancorp. Three firms – Hasbro, Vontier and Webster Financial – have had to update their dividend announcements. The reasons range from the Lyft-esque – missing or inaccurate metrics – to mixed-up dates, missing tables or incorrect phone details.
‘Earnings press release corrections are not that rare: it is very unfortunate that a misplaced zero had such a dramatic impact on the Lyft stock price during a short period in the after-hours market,’ says Nick Mazing, director of research of AlphaSense.
It’s obviously a situation no IRO would wish to find him or herself in, and may still cause onlookers an icy chill to witness. But those who end up living the nightmare may be consoled to find they’re not alone.
Laurie Havelock
Laurie has been part of the IR Magazine team for more than a decade, starting out as a reporter and research editor before becoming editor in 2023. He was previously acting business editor at the i newspaper and deputy business editor at The Daily...
