Shares of Lyft (LYFT -17.23%) saw a crash today after the second-largest ride-sharing company reported disappointing results in its second-quarter earnings report last night.

As a result, the stock closed the day with a loss of 17.2%.

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Second quarter results were strong

Lyft’s second-quarter results were strong, but weaker third-quarter guidance seemed to spook investors.

Second-quarter revenue rose 41% year over year to $1.44 billion, beating the $1.39 billion forecast. Active drivers rose 10% to 23.7 million and rides rose 15% to 205 million. Other positive indicators included the largest increase in new drivers since 2019, a surge in rides related to Pride festivals in June and college graduation weekends. In addition, rides doubled in Canada as Lyft gained traction in the new market.

The bottom line is that the company delivered solid results as adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased to $102.9 million from $41 million in the second quarter of 2023 and it reported its first generally accepted accounting principles (GAAP) profit with net income of $5 million and earnings per share of $0.01.

On an adjusted basis, the company reported earnings per share of $0.24, beating estimates of $0.19.

CFO Erin Brewer said: “Our platform is growing very healthily, as demonstrated by the strength of our financial results, including strong cash flow generation and GAAP net income.”

The forecast was disappointing

For the third quarter, Lyft expects gross bookings of $4 billion to $4.1 billion, virtually unchanged from the second quarter. Adjusted EBITDA is expected to decline to $90 million to $95 million. For the full year, the company is targeting mid-double-digit ride growth and positive free cash flow.

The slowdown in booking growth appears to be due to lower prices due to increased driver supply and other improvements that should pay off in the long run. Overall, the sell-off seems overdone as Lyft continues to grow and improve its cost structure while increasing profitability.

With a price-earnings ratio of just 11, the stock now appears cheap.