Lyft, the ride-hailing service that operates primarily in the United States, is reportedly preparing to lay off approximately 1,200 people, or around 30% of its workforce. The decision is the first major move by Lyft’s new CEO, David Risher, who had been considering the cuts for several weeks. Risher officially took over from Lyft co-founders John Zimmer and Logan Green on Monday. According to an email sent by Risher to employees, the cuts are necessary to bring the company’s costs down and deliver affordable rides, better earnings for drivers, and profitable growth. The savings made from the downsizing will be used to invest in competitive pricing, faster pick-up times, and better driver pay, he said.
The layoffs follow a difficult period for Lyft, which has been struggling to keep pace with its larger rival, Uber. In November, Lyft laid off 13% of its staff, and in February, the company reported record revenue but warned that it would be slowed by economic challenges as it worked to lower prices. Risher has said that keeping prices competitive will be a key part of his strategy to differentiate Lyft from Uber. The news of the layoffs was first reported by The Wall Street Journal, which cited a person with knowledge of the situation. The report said that the layoffs will affect around 1,200 people, which represents around 30% of Lyft’s workforce. The company had about 4,000 employees before the cuts.
Lyft has been facing intense competition from Uber, which has been investing heavily in food delivery and its global ride-hailing business. Uber has also been able to weather the pandemic better than Lyft, as it is a much larger company with more diversified revenue streams. The news of Lyft’s layoffs follows a similar announcement from Uber, which is reportedly preparing to cut around 5% of its global workforce. The cuts are part of a broader effort by Uber to reduce costs and streamline its operations as it seeks to achieve profitability. The ride-hailing industry has been hit hard by the pandemic, as people have been staying at home and avoiding travel. The decline in demand has led to a sharp drop in revenue for both Uber and Lyft, as well as other ride-hailing companies around the world.
Downsizing or Rightsizing?
In addition to the layoffs, Lyft is also expected to close some of its offices next Thursday, according to Risher’s email. The email said that employees would be notified next Thursday if they had lost their jobs. Lyft has long been a distant second to Uber in the ride-hailing market, and it remains to be seen whether the layoffs will help the company gain ground on its larger rival. Lyft was valued at $15.1 billion in its most recent funding round, and it had planned to go public last year. However, the company ultimately decided to delay its IPO in the face of market volatility and concerns about its financial prospects. The company is now reportedly planning to go public later this year, but the timing of the IPO remains uncertain.