SAN FRANCISCO (AP) — Lyft is preparing to lay off hundreds of employees just days after new CEO David Risher began running the ride-sharing service in a bid to cut costs to help bring its rates 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 fired, but the Wall Street Journal reported that at least 1,200 employees would be laid off. The report quotes unidentified people familiar with the cost-cutting plans.
San Francisco-based Lyft declined to provide additional details on Friday, but said more information would be released next week.
Risher, who had served on Lyft’s board of directors before being recruited to replace co-founder Logan Green, cited expense control as one of his top priorities during an interview with The Associated. Press shortly after his hiring announcement. Assuring Lyft is “super efficient,” Risher said the company would be in a better position to lower its fares to attract passengers who had switched to using Uber more frequently because the service offered lower prices for the same journeys.
It was a theme Risher re-emphasized 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 drive down our costs to deliver affordable rides, attractive driver revenue and profitable growth,” Risher wrote.
Lyft intends to begin notifying employees who will be laid off Thursday when the company plans to close its offices.
This will mark the second round of recent job cuts for Lyft after laying off 700 workers last year..
Recurring waves of layoffs emerging as a new phenomenon in the tech industry, reversing more than a decade of mostly unbridled growth.
The two owners of Facebook Meta Platforms and e-commerce giant Amazon have seen two rounds of major layoffs in the past year, largely because the pandemic has fueled a growing demand for digital services and products that has led to hirings that they and other tech companies have begun to regret as the COVID-19 threat waned and growth slowed.
The pandemic first hit Lyft by drying up demand for ride-sharing services, a blow that Uber was able to mitigate through an aggressive expansion of food delivery. It gave people a reason to keep using Uber’s app even when they were stuck at home as Lyft fell out of favor.
Over the past year, it’s become even clearer that consumers have fallen out of the Lyft habit as Uber’s ridership rebounded to pre-pandemic levels and Lyft’s losses mounted. These struggles have caused Lyft’s share price to plummet 69% over the past year, prompting the decision to bring in a new CEO to shake things up.
Lyft shares jumped 6% after it released its cost-cutting plans to close Friday at $10.44.