Lyft Inc. is laying off a significant part of its workforce, the ride-hailing company’s new chief executive told employees in a Friday email, as he tries to cut costs and keep up with a much bigger rival, Uber Technologies Inc.
The Wall Street Journal first reported that the cuts will amount to 30% of the company’s workforce, or about 1,200 employees. Lyft
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does not consider its ride-hailing drivers employees.
A company spokesperson said Friday he could not confirm the numbers.
“We need to be a faster, flatter company where everyone is closer to our riders and drivers so we can deliver on this purpose,” new CEO David Risher said in his email to the staff. “And we need to bring our costs down to deliver affordable rides, compelling earnings for drivers, and profitable growth.”
Risher said employees will learn Thursday whether their jobs have been cut, and that the company will keep its offices closed that day.
“The cuts may help fund investments in other areas to improve Lyft’s product and growth rate (i.e. better driver incentives, rider promotions etc.),” Tom White, analyst for D.A. Davidson, told MarketWatch. He plans to keep a hold rating on the stock.
Lyft has been struggling while rival Uber
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has gained ride-hailing share and built up its delivery business, Uber Eats, over the past couple of years. Lyft has seen its stock fall almost 70% in the past year, with the biggest fall coming after the company’s last earnings report. Lyft stock seesawed after the news, but ended the day 6% higher at $10.44.
Less than two months after that report, company co-founders CEO Logan Green and President John Zimmer were pushed out of daily operations, though they remain on the board. The company last month named board member Risher, a former executive at Amazon.com Inc.
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as CEO.
This is the company’s third round of job cuts in the past year. In November, Lyft laid off 13% of its workforce, or about 700 jobs, after cutting about 60 positions in the summer.
In the blog post in which it made Risher’s email to employees public, Lyft said it is not changing previously issued guidance for the first quarter. The company is scheduled to report its earnings on May 4.
