While the company has not disclosed the exact number of affected employees, a Wall Street Journal report indicates that the cuts could impact around 30 percent of Lyft’s workforce, equivalent to more than 4,000 employees. According to the US daily, the layoffs could cut Lyft’s costs in half.
The decision comes only weeks after Lyft’s newly appointed CEO announced that the company was not for sale, disappointing some investors who had hoped that the departure of the company’s founders would pave the way for a purchase, which had propelled the stock upwards last month.
Lyft And Its Struggle To Stay Afloat
Lyft Inc. is a company that provides and manages an online social rideshare community platform. It gives users access to a network of shared bikes and scooters for shorter rides, first- and last-mile legs of multimodal trips, and information about nearby public transit lines and Lyft Rentals to help them plan any trip. Marcus Cohn, John Zimmer, Rajat Suri, Matt van Horn, and Logan Green created the company in 2007, and it is headquartered in San Francisco, California.
Lyft has faced challenges recently, including increased competition from rivals such as Uber, regulatory hurdles, and financial pressures. The COVID-19 pandemic has also significantly impacted the ride-hailing industry, with ride demand declining as people stayed home and limited their travel due to lockdowns and social distancing measures. In November, the company had let off 683 employees, or 13 percent of its workforce.
Following the epidemic lows, Uber and Lyft have been involved in a struggle for market dominance. According to Reuters, investors are concerned that Lyft’s price cuts to prevent being a distant second in the North American ride-sharing industry could crimp its profitability. Lyft’s stock declined approximately 11 percent this year, compared to Uber’s price rise of 27.5 percent. According to the most recent company report, Uber’s global footprint and more diverse industries gives it an advantage over US-focused Lyft.
The job cuts at Lyft is in line with the broader trend of cost-cutting measures in the ride-hailing industry, as companies face increasing pressures to demonstrate profitability and sustainable growth. Many ride-hailing companies have been exploring various strategies, including reducing the workforce, optimizing operations, and diversifying revenue streams, to navigate the challenges in the industry and improve their financial performance.
To address the challenge of safety post-COVID, many ride-hailing companies like Lyft and Uber have also introduced safety measures to gain customer’s trust amid rising urban mobility and declining car ownership, as reported by FATbit Technologies.
