Capital Markets / Investor Relations in Two Minutes or Less
What LYFT’s 4Q23 Earnings Mistake Teaches Us
Don’t be the guy or gal editing earning materials at 4:59 for a 5 pm Call!
What happened?
A calculation in the company’s forward guidance was wrong.
A 500-basis point improvement was only really a 50-basis point improvement.
What is a 10x magnitude of difference amongst friends?
Error in the press release = IRO worst nightmare
You spend hours and days pouring over the numbers and likely tick and tie the numbers in the release 10 times or more depending on how thorough the prep process being employed.
Even the CFO and Accounting will run a tick and tie of the numbers in all of the earnings materials.
Countless hours of sleep are lost to worrying that a number will be wrong when Business Wire releases for distribution.
The problem is that guidance represents a grey area.
Who is responsible for guidance? CEO? CFO? FP&A? Accounting?
A fat finger still occurs every once in a while, regardless of how many people reviewed the document.
In reality, ticking and tying the numbers in the earnings materials is probably the best use of artificial intelligence for all involved.
What is the impact of such a mistake?
Depends on how good or bad the stock is doing.
Stock working then no one really cares about the mistake, you get a pass.
If the stock is in the tank and management is failing to manage expectations then the mistake looms large.
When times are good investors overlook mistakes, but when times are bad such mistakes might cost you your job!
No one wants to win a severance and “Who Loves Ya, Baby!” from their boss!
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