By Jonathan Stempel
(Reuters) -A federal choose on Thursday dismissed a lawsuit accusing Lyft of defrauding shareholders by ready too lengthy to appropriate a mistake in an earnings launch that prompted the ride-sharing firm’s inventory value to gyrate wildly.
U.S. District Choose Trina Thompson in San Francisco stated shareholders within the proposed class motion didn’t present why it was unreasonable for Lyft to want 42 minutes to repair its Feb. 13, 2024 launch, as an alternative of doing it instantly.
The discharge at 4:05 p.m. EST (2105 GMT) stated Lyft anticipated considered one of its revenue margins to develop by 500 foundation factors, or 5 proportion factors, in 2024 when it truly anticipated 50 foundation factors.
Lyft’s share value rapidly rose 67%, however gave again most of these positive aspects after the corporate’s chief monetary officer gave the right margin at 4:47 p.m. on an investor convention name. A proper correction adopted seven minutes later.
Shareholders stated Lyft’s mistake went past negligence and amounted to reckless and deliberate indifference to the reality.
However the choose discovered no proof that the San Francisco-based firm and its prime executives meant to defraud anybody by reporting an incorrect revenue margin.
She additionally stated the federal appeals court docket in San Francisco, in a 2015 case involving Web companies supplier Yahoo, stated ready six weeks to appropriate statements wouldn’t violate any responsibility to appropriate.
Robert Finkel, a lawyer for the shareholders, declined to remark. Lyft didn’t instantly reply to requests for remark.
Thompson stated the shareholders can attempt to amend their grievance.
The lawsuit sought damages for buyers who purchased Lyft shares at allegedly inflated costs between 4:05 p.m. and 4:51 p.m. on Feb. 13, 2024.
Throughout that interval, Lyft’s market worth rose as a lot as $3.2 billion, after which shed about $2.9 billion of that improve.
Roughly 13% of Lyft’s inventory had been shorted as of Jan. 31, in contrast with 3% at rival Uber.
The case is Chen v Lyft Inc et al, U.S. District Courtroom, Northern District of California, No. 24-01330.
(Reporting by Jonathan Stempel in New York; enhancing by Diane Craft)
