Lyft stock plummets 27% after outlook disappoints and the ride-hailing company says it will need to spend more to attract drivers

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  • Lyft shares dropped as much as 27% in early trading Wednesday on disappointing second quarter projections.
  • The ride-hailing company said it expected $1 billion in revenue in the second quarter, below expectations.
  • The gloomy outlook weighed on shares of fellow rideshare giant Uber, which were down around 8%. 

Lyft Inc. was lower early Wednesday, skidding 27% before the opening bell, headed for its worst-ever single day decline. 

Shares were hovering around $22.56 shortly before the market opened on Wednesday, down from their Tuesday closing price of $30.76. The drop puts Lyft on track for its steepest single-session decline since 2019.

Wednesday’s decline signals more of the same from skittish investors looking to flee once high-flying tech stocks at any sign of pressure. Lyft’s troubles were also a drag on Uber stock, with shares of the ride- hail peer down 8.3% before the bell. 

Lyft reported its first quarter earnings on Tuesday, which exceeded expectations on both earnings and revenue. The company posted earnings per share of $0.07 against a $0.07 expected loss. Lyft just barely missed estimates on active riders reporting 17.8 million active riders against an expected 17.9 million.

On forward guidance, however, the company fell short. Lyft said it expected revenues of $1 billion for the second quarter, below analysts expectations of $1.7 billion. The company also told investors it would need to increase spending on driver incentives to counter a persistent labor shortage and soaring gas prices.

Lyft rigorously invested in incentives for drivers throughout  the COVID-19 pandemic which put strain on its financials. The company did not specify the new spending amount it was targeting to attract drivers.