How Lyft Responded to a Crisis

By Thomas Mustac, Senior Public Relations Specialist — Otter PR  

Anyone who has ever made a typo can sympathize with Lyft CEO David Risher. An extra zero in the company's most recent earning release prompted Lyft’s shares to surge 62% following Wall Street’s closing bell.

This upheaval took place in a matter of mere moments as trading bots initiated a buying frenzy after their autonomous algorithms were triggered by Lyft’s prediction of a 500 basis point (5%) profit increase in 2024. Within five minutes, the company notified investors of the mistake and revised the projection to 50 basis points and a 0.5 percent increase.

Though no one at Lyft deliberately lied or misrepresented the company’s standing, the company still had a full-blown crisis to manage. Its actions during the week that followed this incident demonstrate the power of transparency in a crisis.

Transparency in crisis communication

Transparency means being honest, open, and forthcoming about the situation at hand and involves sharing not only positive updates but also acknowledging and addressing any challenges or mistakes. In a crisis, maintaining transparency builds credibility and allows for effective decision-making, while a lack of transparency results in speculation, mistrust, and long-term damage to an organization’s reputation.

In situations similar to Lyft’s recent debacle, corporations often opt to keep their CEOs out of the media spotlight until the story dies down. However, in the days following the Wall Street rollercoaster, Risher instead opted to speak out. His stance noticeably calmed the market, changed the conversation, and garnered significant internal support.

According to a recent study, simply replacing “no comment” in press conferences with even a brief response improves public mood by 5-7%. In Lyft’s case, a Muck Rack sentiment analysis finds that Risher‘s response caused positive coverage of Lyft to nearly double in one week.

Transparency shifts the narrative

During a crisis, it’s natural for stakeholders to feel anxious and uncertain, which is why transmitting accurate and timely information through transparent communication helps manage perception and expectations. By sharing the extent of the crisis honestly and providing updates on progress and challenges, organizations set realistic expectations and avoid the spread of misinformation or exaggerated rumors.

In Lyft’s case, capitalizing on the typo’s media coverage steered the crisis narrative toward the company’s recent achievements. Whenever someone read about the typo, they also read about Lyft’s higher-than-expected earnings.

Transparent communication with internal stakeholders is key to recovery

Transparency is crucial when addressing external stakeholders but is equally important for internal communication, allowing organizations to demonstrate their commitment to keeping employees informed, fostering trust, and reducing anxiety. This ultimately contributes to maintaining a positive work environment and strengthening employee morale.

Internally, Risher gained significant support after interviews with CNBC, Bloomberg TV, Fox Business, and Yahoo Finance. By admitting fault, defending his staff, and highlighting their performance, he effectively won over internal stakeholder support.

In the case of Lyft’s typo, all’s well that ends well. Although the price of Lyft Shares plummeted after the typo’s retraction, the next day still found shares over 37% higher, closing at $16.69 per share. Lyft surpassed most fourth-quarter Wall Street expectations, with its gross bookings rising 17% year-over-year to $3.7 billion. Its first-quarter bookings also beat forecasts, coming in between $3.5 and $3.6 billion.

This concrete example highlights the importance of transparency as the core of crisis communications in rebuilding trust and credibility, helping manage public perception, and strengthening employee morale. After all, people are more likely to trust organizations that are open and honest about their actions and decisions during a crisis because it shows they have nothing to hide and are genuinely working to resolve the situation.

— Thomas Mustac is Otter PR’s medical and health industry PR specialist. He previously held positions at the Dr. Oz Show and New York Medical College. He has his Master's Degree from Iona College and received an Advanced Certification in Nonprofit Public Relations. He has a diverse background in healthcare, pharmaceutical, telehealth, tech, cosmetics, sports, and interior design public relations.