“Typo in Lyft earnings sends shares aloft nearly 70%,” announced a recent CBS News story.

Here’s what it had to say:

• What a difference a zero can make. 
• Lyft shares enjoyed a short-lived pop after Tuesday’s closing bell, surging as much as 67% after the company issued an outlook mistakenly projecting that its margins would expand an astounding 500 basis points.
• Less than an hour later, the ride-sharing provider offered that the estimate had missed the mark — by a lot, with the real estimate at 50 basis points, or a half of a percentage point. 
• “This is actually a correction from the press release,” Erin Brewer, Lyft’s CFO, told an earnings call, less than an hour after the company issued its initial-and-quickly-corrected forecast in its fourth-quarter earnings report.
• In an amended regulatory filing, Lyft called the misstated margin “a clerical error.”
• “For Lyft this, was a Ted Striker Airplane Moment and a debacle mistake that will be spoken about in Street circles for years to come,” Wedbush analyst Daniel Ives said. “In decades on the Street, never seen anything like it, a black eye moment for Lyft.” 
• The debacle brought a mea culpa from Lyft CEO David Risher, who took responsibility in a Wednesday appearance on CNBC. “Look, it was a bad error, and that’s on me,” he told the network. 
• Lyft realized its mistake on the earnings call as Wall Street analysts zeroed in on the company’s surprisingly strong margins. When a Lyft employee realized the mistake, Risher said he could see her “jaw drop.”
• “Thank goodness we caught it pretty fast,” the executive added. 
• After Tuesday’s brief after-hours surge, Lyft shares reversed course as Brewer’s correction was digested. 
• Lyft shares on Wednesday closed 35% higher as even the corrected earnings report was a good one, with Lyft tallying bookings that surpassed expectations.

The coverage on Forbes.com added the following perspective:

• “Lyft clearly did one thing right – it corrected the error quickly and decisively,” said Brad Foster, a partner specializing in securities litigation at corporate law firm Haynes Boone. “The reality is that people make mistakes, and mistakes are not securities fraud.”

Forbes notes for background that “according to market research firm YipitData, (Lyft) has held around 30% of the US rideshare market compared with 70% for Uber since the second quarter of 2022.” Anyway, it seems correct to me that enforcement action shouldn’t be on the cards here. Actually, the penalty has already been levied, not on Lyft (unless you include the hapless shareholders who bought in at that short-lived high) but on all of us who devote any part of our life to the cause of high-quality decision-useful financial reporting. However impressive the erroneous 500 basis point data point may have seemed in isolation, it was still only a single data point, and even if accurate should hardly should have triggered an unseemly scramble to get hold of the shares at any costs. And then, even modest reflection regarding the disclosure as a whole should have indicated to users either that the data point had to be wrong, or at least that the way in which the separate components of the disclosure related to one another warranted more investigation before making an investing decision. To illustrate, the overall outlook was for an adjusted EBITDA margin (calculated as a percentage of Gross Bookings) of approximately 1.4% to 1.5%; the commentary anticipated “rides growth in the mid-teens year-over-year,” and the bullet point following the error said that “Given these factors, along with our plans for slightly lower capital expenditures for 2024 relative to 2023, we anticipate that Lyft will generate positive Free Cash Flow for the full-year for the first time. In terms of the magnitude, we expect that roughly half of Adjusted EBITDA will convert to Free Cash Flow for full-year 2024.” All positive enough, but not as much as a once-in-a-lifetime margin expansion might lead you to expect.

So all the no doubt painstaking work underlying thel development of the outlook and the crafting of the accompanying disclosure, not to mention all that went into the historical financial information issued at the same time, apparently counted for much less than the sugar rush provided by one improbably super-charged data point. One would like to know more about the process by which that number triggered such activity, for example to what extent the fault was attributable to automation rather than to human folly. You’d like to think, for example, that artificial intelligence-based analysis would act as a brake on unwarranted enthusiasm, but maybe such systems are or will be taught to cynically create and profit from such idiocies more than to prevent them…

So, all more depressing than funny. Which might also be true of the movie Airplane these days, not that I’m planning to do the research on that…

The opinions expressed are solely those of the author.