Earnings roundup: GM bullish despite chip shortage, Lyft tops Q1 estimates

On Wednesday, General Motors shares jumped after topping earnings estimates. Meanwhile, Lyft shares were in focus as the ride-hailing company beat the Street’s expectations as it showed some signs of a recovery.

Video transcript

MYLES UDLAND: All right, let's turn to some earnings that we've gotten over the last 24 hours or so. Let's start with what we've heard out of General Motors. Julie Hyman talking a little bit about the chip shortage and maybe singing a slightly different tune than what we've heard, that it really won't impact their outlook here. But the company does come in with a very slight miss on the top line.

JULIE HYMAN: Yeah, very slight miss on the top line, but a big beat on that bottom line, right? And the message here seems to be, it's not that they won't be affected by the chip shortage. It's that they're finding ways to manage around it seemingly. And this is something that we have seen Ford talk about a little bit, but it looks like the market is taking it better from GM for whatever reason. So the company reaffirming its guidance for the year.

But at the same time, remember, it has still said, it's going to take a hit of $1 and 1/2 to $2 billion of earnings related to the chip shortage, free cash flow of $1 and 1/2 to $2 and 1/2 billion. That also does not change. But really, it's the tone from CEO Mary Barra here, as she talks about this. She says these strong results demonstrate, once again, the underlying strength of our business, especially in North America and China. China still a strong market for the company.

But here's what they're doing strategy wise. They're focusing on making higher margin cars so that they are sort of deploying the supply they do have of chips into their most profitable areas. So that's what Mary Barra has said. She said the teams have worked to minimize the disruption by, quote, "maximizing production of high demand and capacity constrained vehicles."

So that for the moment seems to be working for the company. That seems to be why we saw that beat on the bottom line. And that seems to be why we are seeing the shares move higher as well here. I mean, as we all know, Myles, you know, the demand is not the problem here when it comes to the automakers.

MYLES UDLAND: Yeah, you can still go out and get your [INAUDIBLE], I guess, you know, according to the way that the GM is shifting around some of their stuff. All right, Sozzi, staying in the auto space, Lyft shares higher. Company out last night talking about this supply-demand imbalance that we have seen from a lot of folks at the center of these labor shortages. Several months now where supply has outstripped-- or demand, excuse me, has outstripped supply for Lyft.

BRIAN SOZZI: Yeah, improving quarter here, Myles. Revenue up 7% quarter over quarter, which is how I think a lot of these ridesharing companies are going to be measured for the balance of the year. And I caught up with Lyft's co-founder and president John Zimmer last night. He's telling me that the recovery is broad-based across the country. And in many respects, it reflects people getting their vaccine and going back out and traveling. You know, they put a cool stat in the earnings call last night. The trips to airports during the quarter up 65% year over year. So that was very good, too.

Zimmer also reiterating to me that the company does still expect to be adjusted operating profitable by the third quarter. Of course, that is helped by the topline recovery, but also the fact they just sold their autonomous driving business to Toyota for $550 million, so that pulls back a lot of expenses. Two things worth noting here or watching, Myles and Julie. April-- April rides were down. So Lyft is banking on a strong recovery in May and June in rides to make its numbers.

Also, too, a lot of focus on the driver shortage. And that driver shortage that Lyft called out is pushing up prices for rides. Now it didn't affect demand per se in the first quarter. But if it continues to press up or cause prices to inflate here, you have to wonder if people just simply get out there and walk or take the subway.

MYLES UDLAND: Yeah, it's going to be really interesting to see sort of what the-- to use the economist speak, what the true elasticity of demand for Lyfts is when prices go up as much as I think we expect they will in very popular rideshare areas as we get into summer months with the mostly open economy. I think that will be a very fascinating dynamic to watch.