Lyft announced that it would lay off 26 percent of its staff, becoming the latest company to initiate cuts in its workforce, as concerns over a potentially deep recession rise.
The Sam Francisco-based firm had previously laid off 700 employees, or 13 percent of its staff, last November.
Lyft laid off 60 people, or less than 2 percent of its workforce last July, and scaled back on renting cars to customers after announcing it would slow hiring and reduce the budgets of some of its departments in spring of last year.
New CEO Has Big Plans for Rideshare Service
The latest round layoffs is one of the first moves by the company’s new CEO, David Risher, who took up his new role on April 17.He emphasized a need to streamline operations and to return to “better meeting the needs of riders and drivers” in employee communications and public messaging.
Risher’s plan is to drive down costs to help bring its fares more in line with its biggest rival, Uber.
“Efficiency is also in the air,” he said, adding, “I’m very, very comfortable with the idea that you can sort of get twice the team, you know, without twice the people.”
Investors Disappointed With Lyft’s Financial Results
In late March, after massive pressure from investors, Lyft’s co-founders, Logan Green and John Zimmer, decided to step down from managing the company and appointed Risher, a member of the board.The last straw was when the company’s shares tumbled more than 35 percent after preliminary results were released in February, which showed a weaker-than-expected revenue outlook for the first quarter of 2023.
Despite record revenue for the fourth quarter, investors have been worried about the ride-hailing company prospects.
Lyft’s main competitor, Uber, has seen its shares climb about 17 percent year to date, according to Yahoo Finance.
Uber Surges Past Flailing Rival
Uber has dominated the rideshare market in the aftermath of the pandemic, leaving its rival far behind.Unlike its rival, Lyft failed to diversify outside transportation and limited its business to North America after the pandemic cratered demand for ride-hailing services,
Uber, on the other hand, was able to soften the blow by aggressively expanding its food-delivery business.
This gave it more diversified business model over Lyft by giving customers a reason to continue using Uber’s app from home, while its competitor fell out of favor.
Layoffs Dominate Tech Sector
Layoffs have been surging in the tech sector over the past year, with major companies like Meta and Amazon shedding thousands of jobs.Meta Platforms said in March that it was cutting 10,000 jobs, after terminating 11,000 employees late last year, which was approximately about a quarter of its staff.
The social media company has seen its share value jump in the wake of its massive cost-cutting efforts, rising 15 percent on April 28 after announcing its latest revenue report.
Dropbox announced plans on April 27 to lay off 500 people, or about 16 percent of its staff.
More than 184,000 tech employees have lost their jobs in 2023 alone, according to data from Layoffs.fyi.
Lyft is expected to release its first-quarter 2023 earnings report on May 4.