Lyft Inc’s CEO, David Risher, announced on Friday that the ride-hailing giant would significantly cut jobs in another round of layoffs to reduce costs.
The news sent Lyft’s shares up by approximately 4%, and the company has declined to provide details on the number of affected staff.
However, the Wall Street Journal reported earlier that the move could impact 30% of Lyft’s workforce, which is more than 4,000 employees.
The decision to reduce its workforce comes weeks after the newly appointed CEO declared that Lyft was not for sale, disappointing some investors who had hoped that the exit of the company’s founders would pave the way for a deal.
This news pushed up Lyft’s stock last month.
According to the WSJ report, Lyft could see a reduction in costs by half after the layoffs.
In November, the company laid off about 683 employees, which constituted 13% of its then workforce, to cut costs and cope with stiff competition from bigger rival Uber in a tough economy.
The two companies have been engaged in a fierce battle for market share, coming off the pandemic lows.
Investors are worried that Lyft’s price cuts, aimed at avoiding being a distant second in the North American ride-sharing market, could squeeze its profits.
The companies’ last reported results showed that Uber’s global presence and more diversified businesses were giving it an edge over U.S.-focused Lyft.
As of Thursday’s close, Lyft’s stock had fallen by approximately 11% this year, compared to Uber’s price gain of 27.5%.
The decision to reduce its workforce is not an uncommon one, especially in the tech industry, where companies regularly restructure to remain competitive.
Nevertheless, layoffs are never an easy choice, and they have an impact not only on employees but also on the company’s culture and future.
Lyft is, therefore, expected to provide support and resources to its affected staff during this difficult time.
Additionally, the company may have to reassess its strategy and explore other ways to improve its financials while retaining its position in the market.
In conclusion, Lyft’s decision to cut jobs is a clear indication of the challenging times facing the ride-hailing industry.
Nonetheless, the company must strive to remain competitive while taking care of its employees’ welfare.