Ride-hailing company Lyft is set to cut nearly 700 jobs as bosses work to “lean” it amid global economic uncertainty.
The San Francisco-based firm’s co-founders, John Zimmer and Logan Green, told employees Thursday that 13 percent of the workforce will lose their jobs.
The cuts are the latest cost-cutting measure the company has announced after slowing hiring in May — then freezing it entirely — and cutting 60 jobs in July.
The announcement of fresh cuts comes after Lyft’s rival, Uber, released earnings that showed the company is recovering sharply from the pandemic and revenue is up 72 percent.
Lyft, which is due to release its own third-quarter results on Monday, said the layoffs did not impact its previously released guidance for the period.
Lyft’s share price has fallen since January and the company is now set to cut nearly 700 jobs
Lyft co-founders John Zimmer (pictured) and Logan Green said the company “needs to get leaner”
The company’s share price is down 69 percent year-to-date and is currently around $14, compared to nearly $45 in January.
Zimmer and Green announced the job cuts in a Wall Street Journal memo, telling employees, “There are several challenges across the economy.
“We’re probably facing a recession sometime in the next year and rideshare insurance costs are rising.
“We worked hard this summer to reduce costs: we slowed down hiring and then stopped; cut spending; and paused less critical initiatives.
“Even so, Lyft needs to slim down, which requires us to part ways with incredible team members.”
Lyft has about 4,000 employees, not counting drivers.
Recent statistics on active riders for Lyft show them peaking at nearly 23 million in the fourth quarter of 2019, months before the pandemic began.
In the second quarter of 2020, at the peak of the pandemic, the number of active drivers collapsed to 8.7 million.
By the last quarter of 2021, it had recovered to almost 19 million.
Lyft’s announcement on Thursday said 13 percent of its employees, nearly 700 people, will lose their jobs
Uber shares rose this week as the company announced that its revenue rose 72 percent
Meanwhile, Uber shares rose 12 percent on Tuesday after announcing that revenue was up 72 percent as drivers returned from pandemic lows and deliveries ramped up.
Uber announced that revenue increased tremendously year-over-year.
Like Lyft, the ridesharing app has seen a huge drop in customers during the pandemic as people holed up in their homes and working from home became the norm.
CEO Dara Khosrowshahi said: “Cities are reopening, travel is increasing and more broadly an ongoing shift in consumer spending from retail back to services.
‘We have seen these trends continue in the fourth quarter, with October being our best month yet for mobility and overall gross bookings for the company.’
‘The Company expects fourth quarter gross bookings to increase 23 to 27 percent year over year and total $30 to $31 billion.’
As decades of inflation hurt consumer spending and drive up costs for businesses, companies in all sectors are shedding jobs and downsizing operations to safeguard profits.
Peloton shares slumped around 16 percent Monday morning after the fitness company, which has been booming during the pandemic, reported a worse-than-expected drop in sales.
The difficult economic climate was also highlighted by Peloton’s dismal recent earnings report
Unlike Lyft and Uber, Peloton boomed during the pandemic but failed to maintain momentum
Earlier this month, around 500 workers were told they would lose their jobs – the fourth round of cuts this year.
The New York-based company’s quarterly revenue fell 23 percent to $616.5 million — down from its guidance of $625 million to $650 million.
And Peloton also said sales for the current quarter, which includes the lucrative holiday season, will be lower than analysts had predicted.
Peloton’s statement this morning said revenue for the fiscal second quarter, which runs through December, will be $700 million to $725 million — down 37 percent from the same period last year.
Analysts had estimated revenue of $874 million for the quarter.
The worse-than-expected outlook sent Peloton shares briefly down as much as 16 percent on Thursday morning.
CEO Barry McCarthy told The Wall Street Journal, “There comes a time when we’ve either succeeded or we haven’t.
“We need to grow to bring the business to a sustainable level.”