Lyft Shocks Market With Massive $750 Million Buyback, Shares Pop 28% After Earnings Miss…

Lyft just put a loaded gun on the table and dared Wall Street to blink. The result? Wall Street blinked and shot shares up 28% on the day. In short, Lyft decided to buy a bigly $750 million worth of its own stock. And while some may have saw this as some kind of warning signal, Lyft CEO David Risher basically said, “there’s nothing to worry” about—presumably with the kind of dead-eyed confidence you only see in hostage videos and quarterly earnings calls.

(Source: Giphy) 

Keep in mind, this is the same Lyft that’s spent years gasping for air in Uber’s shadow, burning cash and just missed revenue projections by $2 billion ($1.45 billion vs. $1.47 billion expected). But again, no one cared. Why? Because gross bookings hit $4.16 billion, barely above estimates, and rides increased to 218 million. So now, Lyft is suddenly a golden goose. Meanwhile they beat EPS by one cent per share. Classic. 

Now back to the buyback—announce you're spending three-quarters of a billion dollars on your own stock and watch investor IQ drop 40 points in real-time. Suddenly, activist investors like Engine Capital are pulling out of their board fight and sending thank-you notes. 

(Source: CNBC) 

In addition, Goldman Sachs is falling all over itself upgrading the stock to “Buy,” citing “strong execution in a stable industry backdrop.” Translation: Lyft hit the treadmill for one quarter and now we’re pretending it’s a marathon runner. Nobody wants to admit the entire ride-sharing business model still depends on underpaid gig workers, razor-thin margins, and a consumer base one bad CPI report away from deleting the app entirely.

But alas, that’s where we are at. While the rest of the economy is getting squeezed like a lemon, Risher’s went on television, looked the American public dead in the face, and said, “We’re not seeing anything to worry about.” Could it be the fact that he’s feeling zesty after the $200 million FreeNow expansion in Europe? Maybe, maybe not… but regardless, management feels confident enough within their own fundamentals to drop nearly $1 billion to vacuum supply out of the market. 

(Source: Giphy) 

So yeah, whether it’s delusion, desperation, or straight confidence in knowing something that everyone else doesn’t know, Lyft just gave the Street a middle finger and rode off into the sunset this Friday. Meaning, keep your eyes on Lyft over the weekend. It’ll be interesting what Monday’s price action gives us. For now, place your bets accordingly, friends. Until next time… 

P.S. Oh, I’m sorry, I didn’t know you liked getting rekt. Let’s face it, retail investors get the short end of the stick all day everyday. It’s the smart money’s world, and we are just living in it–only useful when it comes to liquidity purposes in the market. Meaning, if you’re as pissed off as I was when I found out Milli Vanilli was lip syncing the whole time, then it’s time to go from investing blind, to investing smart. Luckily for you, the key is right here as a Stocks.News premium member. Click here to see exactly how our premium members are printing while others quake in the face of today’s market chaos. 

Stocks.News holds positions in Uber as mentioned in the article.