Lyft is preparing to lay off hundreds of employees just days after new CEO David Risher began steering the ride-hailing service with a eye of driving down costs to help bring its fares 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 end of his first week as Lyft’s CEO.
The note didn’t specify how many people would be jettisoned, but The Wall Street Journal reported that at least 1,200 employees will be laid off. The report cited unidentified people familiar with the cost-cutting plans.
San Francisco-based Lyft declined to provide additional 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 expense control as one of his top priorities during a interview with The Associated Press shortly after his hiring was announced. By ensuring Lyft is “super efficient,” Risher said the company would be in a better position to lower its fares to lure back passengers who had shifted to using Uber more frequently because that service was offering lower prices for the same trips.
It was a theme Risher emphasized again in his Friday email explaining why he decided to slash the payroll, which doesn’t include Lyft’s drivers — a group that is classified as independent contractors.
“We need to bring our costs down to deliver affordable rides, compelling earnings for drivers, and profitable growth,” Risher wrote.
Lyft intends to start notifying employees who will be laid off on Thursday when the company plans to close its offices.
It will mark the second round of recent job cuts for Lyft after shedding 700 workers last year.
Recurring waves of layoffs are emerging as a new phenomenon in the tech industry, reversing more than a decade of mostly unbridled growth.
Both Facebook owner Meta Platforms and e-commerce giant Amazon have gone through two rounds of major layoffs during the past year, largely because the pandemic fueled booming demand for digital services and products that resulted in hiring sprees that they and other tech companies began to regret as the COVID-19 threat waned and growth tapered off.
The pandemic initially walloped Lyft by drying up demand for ride-hailing services, a blow Uber was able to soften through an aggressive expansion in food delivery. That gave people a reason to continue using Uber’s app even when they were stuck at home while Lyft fell out of favor.
During the past year, it has become even clearer that consumers fell out of the Lyft habit as Uber’s ridership bounced back to pre-pandemic levels and Lyft’s losses mounted. Those struggles have caused Lyft’s stock price to plunge 69% during the past year, prompting the decision to bring in a new CEO to shake things up.
Lyft’s shares surged 6% after news of its cost-cutting plans came out to close Friday at $10.44.