Lyft to make 'significant' layoffs to reduce costs and free up investment to compete
Updated: Apr 24, 2023
Lyft CEO David Risher announced on Friday that the company will make 'significant' layoffs to reduce costs and compete with Uber, boosting its shares by about 4%.
The company did not disclose how many employees will be affected, but sources told the Wall Street Journal that it could be 30% of Lyft's workforce, or more than 4,000 workers.
The news comes after Risher, a former Amazon executive, took over as CEO earlier this month and said that Lyft was not looking for a sale, despite rumours that the departure of the co-founders could lead to a deal.
Lyft could save around 50% of its costs after the layoffs, according to the WSJ report.
The company had already cut about 700 jobs, or 13% of its staff, last year to cope with the economic downturn and the fierce competition from Uber.
The two rivals have been fighting for market share in North America, and investors are concerned that Lyft's lower prices to avoid losing customers to Uber would hurt its profitability.
Uber has an advantage over Lyft because of its global presence and its diversified businesses, such as food delivery and freight.
Lyft's stock has dropped 11% this year, while Uber's has risen 27.5%, as of Thursday's close.
In Friday's statement, David Risher said: “Here’s why I’ve made this decision. As you’ve heard me say, great companies have purpose. Lyft has two purposes that are linked to each other: We help riders get out and about so they can live their lives together, and we provide drivers a way to work that gives them control over their time and money.
“We need to be a faster, flatter company where everyone is closer to our riders and drivers so we can deliver on this purpose. And we need to bring our costs down to deliver affordable rides, compelling earnings for drivers, and profitable growth. We intend to use these savings to invest in competitive pricing, faster pick-up times, and better driver earnings. All of these require us to reduce our size and restructure how we’re organised.”
