Lyft is laying off hundreds of workers as part of new CEO David Risher’s cost-cutting plan
Lyft is preparing to lay off hundreds of workers just days after new CEO David Risher began steering the ride-hailing service to cut costs to bring its rates more in line with its biggest rival, Uber.
Risher, a former Amazon executive, told Lyft’s workforce of more than 4,000 employees in an email posted online Friday that a “significant” number of them would lose their jobs. It came at the end of his first week as CEO of Lyft.
The memo did not specify how many people would be laid off, but The Wall Street Journal reported that at least 1,200 employees would be laid off. The report cited unidentified individuals with knowledge of the austerity plans.
San Francisco-based Lyft did not immediately respond to a request for comment.
Risher, who had been a Lyft board member before being hired to replace co-founder Logan Green, cited cost control as one of his top priorities in an interview with The Associated Press shortly after his hiring was announced. By making sure Lyft is “very efficient,” Risher said the company could lower its fares to lure back passengers who had switched to Uber more often because the service offered cheaper fares for the same trips.
It was a theme Risher emphasized again in his Friday email explaining why he decided to cut the payroll, which does not include Lyft drivers — a group classified as independent contractors.
“We need to reduce costs to provide affordable rides, attractive earnings for drivers and profitable growth,” Risher wrote.
Lyft plans to begin notifying laid-off workers on Thursday as the company plans to close its offices.
It marks the second round of recent job cuts at Lyft, after laying off 700 workers last year.
Repeated 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 major rounds of layoffs in the past year, largely as the pandemic fueled growing demand for digital services and products, leading to hiring that they and other tech companies have come to regret. As the threat of COVID-19 recedes and growth fades.
The pandemic initially knocked out Lyft by drying up demand for ride-hailing services. Uber was able to cushion the blow with an aggressive expansion into food delivery. This gave people a reason to keep using Uber’s app even when they were stuck at home when Lyft didn’t favor it.
Over the past year, it has become increasingly clear that consumers were falling out of the Lyft habit as Uber’s ridership returned to pre-pandemic levels and Lyft’s losses grew. Those struggles have sent Lyft’s stock price down 69 percent over the past year, prompting the decision to bring in a new CEO to shake things up.
Shares of Lyft rose 6 percent after news of its cost-cutting plans hit $10.44 on Friday.
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