What Happened:

Shares of ride sharing service Lyft (NASDAQ: LYFT) jumped 9.4% in the morning session after the company reported first quarter results that blew past analysts' revenue expectations as its gross bookings and number of rides conducted outperformed. Its EPS and free cash flow topped Wall Street's estimates -- this was the second consecutive quarter of positive free cash flow, which is encouraging given its unprofitable history. Zooming out, we think this was an impressive quarter that should delight shareholders. After the initial pop the shares cooled down to $17.27, up 4% from previous close.

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What is the market telling us:

Lyft's shares are very volatile and over the last year have had 48 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 3 months ago, when the stock gained 37.7% on the news that the company reported fourth-quarter results indicating growing users, enabling it to beat Wall Street's revenue and EPS estimates. Rides growth accelerated for the fourth quarter in a row to 26% year on year in the quarter. Guidance for Q1 2024 came in ahead of expectations for gross bookings (from which the company generates revenue by taking a cut) and adjusted EBITDA, showing that both near-term growth and profits are better than expected. Lastly, the company expects to generate positive free cash flow for the full year 2024, converting roughly half its forecasted full-year EBITDA into cash. This is a nice milestone. Interestingly, the initial company release had a typo. Instead of guiding to a 50 basis point (0.5 percentage points) increase in 2024 adjusted EBITDA, the text stated 500 basis points (5 percentage points). This caused the stock to spike up 65% in after-hours trading before settling down. Holding aside the stock move caused by the typo, it was still a very good quarter, and the stock is currently reflecting this.

Lyft is up 26.1% since the beginning of the year, but at $17.27 per share it is still trading 14.9% below its 52-week high of $20.28 from March 2024. Investors who bought $1,000 worth of Lyft's shares 5 years ago would now be looking at an investment worth $328.86.

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