In an email sent out to the Lyft employees, it was disclosed that a “significant” number of them would face job cuts. The measure has been taken to align fares with those of Uber and to reduce costs.
Lyft, the ride-hailing giant, is reportedly set to slash hundreds of jobs just days after its new CEO, David Risher, took the helm with a goal to reduce costs and bring fares in line with Uber. In an email to the 4,000+ strong workforce, posted online last Friday, Risher warned of a “significant” number of layoffs. Although the exact number of job cuts was not specified, the Wall Street Journal has reported that the layoffs could affect at least 1,200 employees, citing insiders familiar with the cost-cutting plans. Risher’s announcement came at the end of his first week as Lyft’s CEO.
A request for comment made to Lyft, headquartered in San Francisco, was left unanswered at the time of reporting.
According to an interview with the Associated Press, new CEO, David Risher, emphasized the importance of expense control shortly after his appointment. Risher, who previously served on Lyft’s board, stated that by improving efficiency, the company could lower its fares and win back passengers who had turned to Uber due to lower prices for similar trips.
In his email to employees on Friday, David Risher reiterated the need to reduce costs and deliver affordable rides, compelling earnings for drivers, and profitable growth. The payroll cuts, which exclude Lyft’s independent contractor drivers, were deemed necessary to achieve these objectives.
The company is set to inform affected employees of their layoffs on Thursday, coinciding with the closure of some of the company’s offices. This marks the second round of job cuts for Lyft, following the reduction of 700 workers in the previous year.
The tech industry is experiencing a new trend of recurrent layoffs, a stark contrast to over a decade of growth with few employment setbacks.
The COVID-19 pandemic severely impacted ride-hailing services, with Lyft being particularly hard hit as demand plummeted. Uber responded by expanding into food delivery, ensuring that its app remained relevant even when customers were confined to their homes, while their popularity dwindled.
In the past year, it has become increasingly apparent that consumers have abandoned Lyft in favor of Uber, whose ridership has bounced back to pre-pandemic levels, leaving Lyft to deal with mounting losses. As a result, Lyft’s stock price has plummeted by 69% in the past year, prompting the appointment of a new CEO to reinvigorate the company.
The companies cost-cutting plans, announced on Friday, were positively received by the market, resulting in a 6% surge in the company’s stock price to close at $10.44.