Lyft gears up to make ‘significant’ layoffs under new CEO
SAN FRANCISCO (AP) – Lyft is preparing to lay off hundreds of employees just days after new CEO David Risher began managing the ride-hailing service with an eye to cutting costs to bring prices more in line with its biggest rival, Uber.
Risher, a former Amazon executive, informed Lyft’s workforce of more than 4,000 employees in an email posted online Friday that a “significant” number of them will lose their jobs. It came at the end of his first week as Lyft’s CEO.
The memo did not specify how many people would be evicted, but The Wall Street Journal reported that at least 1[ads1],200 employees will be laid off. The report cited unidentified people familiar with the cost-cutting plans.
San Francisco-based Lyft declined to provide further details Friday, but said more information will be released next week.
Risher, who had been a Lyft board member before being recruited to replace co-founder Logan Green, cited cost control as one of his top priorities during an interview with The Associated Press shortly after his hiring was announced. By ensuring that Lyft is “super efficient,” Risher said the company would be in a better position to lower its prices to lure back passengers who had switched to using Uber more often because the service offers lower prices for the same rides.
It was a theme Risher emphasized again in his Friday email explaining why he decided to cut the payroll, which does not include Lyft’s drivers — a group classified as independent contractors.
“We must reduce our costs to deliver affordable rides, compelling earnings for drivers and profitable growth,” Risher wrote.
Lyft intends to begin notifying employees who will be laid off Thursday when the company plans to close its offices.
It will mark the second round of recent layoffs for Lyft after losing 700 workers last year.
Recurring waves of layoffs is emerging as a new phenomenon in the technology industry, reversing more than a decade of largely unrestrained growth.
Both Facebook owns Meta Platforms and e-commerce giant Amazon have gone through two rounds of major layoffs over the past year, largely because the pandemic led to booming demand for digital services and products that resulted in hiring sprees that they and other tech companies began to regret as the threat of COVID-19 subsided and growth decreased.
The pandemic initially hit Lyft by drying up demand for ride-hailing services, a blow Uber was able to cushion through an aggressive expansion of food delivery. It gave people a reason to keep using Uber’s app even when they were stuck at home while Lyft fell out of favor.
Over the past year, it has become even more apparent that consumers were falling out of the Lyft habit as Uber’s ridership returned to pre-pandemic levels and Lyft’s losses mounted. Those struggles have sent Lyft’s stock price plunging 69% over the past year, prompting the decision to bring in a new CEO to shake things up.
Lyft’s shares rose 6% after news of the cost-cutting plans were announced to close Friday at $10.44.