Lyft, the North American ride-sharing company, is set to lay off a significant portion of its workforce in a major restructuring move. The decision was announced by the newly appointed CEO David Risher, a former Amazon executive, in a note to stakeholders during his first week in charge.
Risher stated, “I’m confirming that we will significantly reduce the team size as part of a restructuring to focus on better meeting the needs of riders and drivers.” Although Lyft has not provided specific numbers, the Wall Street Journal reported that at least 1,200 employees, representing around 30 per cent of its 4,000-person workforce, will be affected by the layoffs.
This announcement follows a previous reduction in headcount in November last year when Lyft cut 700 jobs or about 13 per cent of its workforce at the time. Since its initial public offering (IPO) in 2019, Lyft has faced ongoing struggles, with its shares currently trading below $10 despite debuting at $72. Meanwhile, its primary competitor Uber has maintained a higher market share and capitalization.
The layoffs at Lyft are part of a broader trend of tech layoffs that began in late 2022 and has continued into the new year, with companies like Amazon, Google, Microsoft, and Meta also cutting jobs. Layoffs.fyi, a layoff tracker, indicates that these companies have collectively laid off over 172,000 employees in 2023.
Despite the ongoing challenges, Lyft has reassured stakeholders that the restructuring will not impact its previously issued guidance. The company will report its first-quarter earnings for 2023 on May 4.
In a note to employees, Risher stated, “We need to bring our costs down to deliver affordable rides, compelling earnings for drivers, and profitable growth.” He added that the money saved from the downsizing would be invested in “competitive pricing, faster pick-up times and better driver earnings.”
Sona Iliffe-Moon, a Lyft spokesperson, acknowledged the difficulty of the decision, stating, “This is a hard decision, and one we’re not making lightly. But the result will be a far stronger, more competitive Lyft.”
The layoffs come as Lyft’s new CEO, David Risher, aims to refocus the company on reducing costs and aligning its prices with those of its primary competitor, Uber. Risher emphasized the need for cost reduction in his email to employees, highlighting his intent to make Lyft more efficient in order to win back customers who have switched to Uber due to lower prices. The company plans to notify affected employees on Thursday, with Lyft offices to be closed on that day.
