Could it have been inspired by Valentine's Day? Perhaps a gesture of affection toward its shareholders. Lyft announced on Tuesday, February 13, that it significantly reduced its losses in 2023 and anticipates achieving profitability in 2024, leading to a projected increase in its margin by five percentage points this year. Following the announcement, the company's previously unstable stock price surged by more than 60%. Yet, even Valentine's Day declarations can be ephemeral. An hour later, the company's CFO modestly acknowledged a typographical error: there was one zero too many.
The disappointed shareholders had backed the wrong horse. Had they bet on rival Uber, they would have received a more substantial gift. A week after announcing the first annual profit in its history, $1.9 billion (€1.8 billion) in net income, the company announced that it would repurchase $7 billion worth of its shares.
Buyouts of this kind, which are tantamount to giving money to shareholders, are fashionable, but still rare for growing companies, especially in tech. In general, they prefer to invest their cash in developing new markets. That's why Amazon hasn't paid its shareholders for decades. For the global leader in ride-hailing services, the gift arrived straight away.
Rewarding shareholders
Why such a rush, when Uber CEO Dara Khosrowshahi is promising at the same time to focus on growing the company's transport and delivery businesses? Doesn't he have anything better to do with this hard-earned money? Since its creation in 2009, the company has lost over $30 billion. The company has decided to reward its patient and supportive shareholders in this manner as a token of gratitude, ensuring that it has the means to grow and remain profitable.
This is not the only reason. It's also a question of offsetting the charge on its accounts when staff exercise the options granted at the IPO, at the expense of the shareholders. This amounts to $10 billion. Instead of spoiling the delivery drivers and chauffeurs who are currently protesting from London to New York, rewarding shareholders and employees has become a priority.