Lyft is set to cut 1,200 jobs – 30% of its workforce
Lyft will cut 1,200 HQ jobs – 30% of its workforce – to cut costs after its stock price fell 70% in a year as rival Uber saw its fortunes dramatically improve
- Lyft is cutting 1,200 jobs to cut costs, the new CEO confirmed Friday
- The ride-sharing app has struggled to capture Uber’s market in recent years
- In November, it carried out another round of layoffs that affected 700 jobs
Lyft is cutting about 1,200 jobs — about 30 percent of its total workforce — to cut costs by about 50 percent.
It comes just three weeks after the company announced it would hire a new CEO, David Risher, and that its two co-founders, Logan Green and John Zimmer, would step down.
The share price of ride-sharing apps fell about 70 percent over the past year as it struggled to capture Uber’s market.
Uber’s share price fell just four percent over the same period.
The announcement marks Lyft’s second round of layoffs in the past six months — in November, Lyft announced it would cut nearly 700 jobs.
The layoffs, first reported by the Wall Street Journal on Friday does not affect drivers, whom the company does not consider employees.
Lyft is cutting about 1,200 jobs to cut costs by about 50 percent
David Risher (pictured) was one of the first employees at Amazon and served as the e-commerce giant’s first head of product. He was named CEO of Lyft three weeks ago
In a message to staff after the Journal reported the cuts on Friday, Risher said, “We need to reduce our costs to provide affordable rides, attractive driver revenues and profitable growth.”
Risher confirmed in the internal memo, which has now been made public, that cuts were imminent, but would not say how many people would be affected. Workers will be notified of their status by 8:30 a.m. Thursday, April 27, Risher wrote.
Those who lose their jobs will receive at least ten weeks’ pay and accelerated share awards.
“I support this decision and understand that there is a huge cost involved,” Risher said.
“We need to be a faster, flatter company where everyone is closer to our riders and drivers,” he continued.
In February, Lyft’s stock price fell nearly 40 percent in a single day after its quarterly earnings disappointed investors and announced the ride.
The share price of ride-sharing apps fell about 70 percent over the past year as it struggled to capture Uber’s market
Lyft will report its March quarter results on May 4
Since the pandemic, Lyft has lost out to market leader Uber, which branched out from North America and into other industries such as food delivery.
Uber has also focused hard on improving the lives of its drivers, with CEO Dara Khosrowshahi buying a Tesla and taking on shifts himself to see what problems the most affected drivers were so the company could fix them.
Risher’s first tenure at Lyft, who had been running a nonprofit Worldreader for more than a decade, initially caused a rise in the company’s stock price, but also sparked speculation that it was preparing to sell.
Shares initially rose about 8 percent in early trading as investors reviewed the news.
Risher was one of the first employees at Amazon and served as the e-commerce giant’s first head of product. Since 2009 he has focused on Worldreader to stimulate reading among children. He is also credited with early growth at Microsoft.
Risher’s experience on Lyft’s board also gives him strong command of the company relative to the average incoming CEO, RBC Capital Markets said.
Lyft will report its March quarter results on May 4.