Why Lyft Stock Dropped Today

Shares of ride-sharing platform (NASDAQ: LYFT) dropped by more than 16% at one point on Wednesday morning after the company reported its fourth-quarter results Tuesday afternoon. Management's guidance for the current quarter has investors concerned about the competitive landscape. However the stock's declines moderated as the session progressed, and as of 12:05 p.m. ET, it was only down 3.4%.

Lyft's riders pay for transportation through the platform, but the company doesn't keep all of that money -- much of it goes to taxes and paying drivers, for example. The total dollar value of all the transactions is known as its gross bookings. And Lyft's Q4 bookings were within its guided range. Management had called for gross bookings of $4.28 billion to $4.35 billion and Q4 bookings came in at a record $4.3 billion, up 15% year over year.

Lyft's bookings were boosted by an increase in active riders. It ended Q4 with 24.7 million active riders, up from 24.4 million in the previous quarter. Moreover, rides were up by a greater amount, showing that active riders are also using the platform with greater frequency, continuing a promising trend from recent quarters.

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Source Fool.com