Lyft sued after typo caused stock price to jump 60%
What's the story
A shareholder has initiated a class action lawsuit against ride-hailing company Lyft. Yuan Chen, the shareholder, claims to have suffered losses due to misleading financial statements from Lyft. The company mistakenly added an extra zero to a key figure its report released last month, causing the stock price to surge. The suit targets the company's top executives for their role in the dissemination of incorrect financial projections. In class action lawsuit, a group of individuals/shareholders is represented by an individual.
Details
Stocks sharply dipped after Lyft's corrected financial forecast
The February report inaccurately suggested Lyft's EBITDA margin (the total sum of ride transactions) would grow by 500 basis points (5%) in 2024. The stock experienced a dramatic rise of over 60%, after the overstated projections. However, during the earnings call, Lyft's CFO Erin Brewer referenced EBITDA margin growth of 50 basis points (0.5%). This triggered a sharp drop in the company's share price as the market responded to the revised data.
Compensation demanded
Lawsuit seeks compensation for Lyft's stock fluctuation
The plaintiff, Chen, is pursuing legal action to seek compensation for the financial damages incurred due to stock price fluctuation. The lawsuit demands a jury trial to address grievances related to misleading financial statements. It alleges that Lyft executives had prior access to the reports and could have prevented or corrected the misstatements before they affected shareholders and the market.