- Lyft, Inc LYFT said it would cut 13% of staff, equivalent to 683 employees.
- The ride-hailing company chose to downsize as it struggled to cope with a complex economic backdrop, Bloomberg reports citing an internal memo.
- Lyft will also divest its first-party vehicle service business and expects the buyer will offer workers in that division positions.
- Also Read: How Will Lyft's Service Fee Hike Affect Its Rides?
- Lyft would freeze hiring in the U.S. until 2023 to rein in costs and maintain a profit during macroeconomic instability.
- Lyft has more than 5,000 employees, excluding its drivers.
- Lyft laid off 60 people, or under 2% of its workforce, in July.
- In May, it said it planned to slow hiring and reduce the budgets of some of its departments.
- "There are several challenges playing out across the economy. We're facing a probable recession sometime in the next year, and ride-share insurance costs are going up," the Wall Street Journal cites the memo.
- "We are not immune to the realities of inflation and a slowing economy," Lyft Co-Founders John Zimmer and Logan Green said in the memo. "We need 2023 to be a period where we can better execute without having to change plans in response to external events — and the tough reality is that today's actions set us up to do that."
- Lyft said it maintained previously issued guidance on third-quarter 2022 revenue, contribution margin, and adjusted EBITDA.
- It had forecast revenue of $1.04 billion - $1.06 billion and EBITDA of $55 million - $65 million for the third quarter.
- Lyft also maintained its 2024 financial targets for $1 billion in adjusted EBITDA with more than $700 million in free cash flow.
- The WSJ report specified that rival Uber Technologies Inc's UBER diversified business, which includes global rides operations and a food-delivery arm that became its lifeline during the pandemic, has fared better with Wall Street.
- In May, Uber said it would slow hiring.
- Both companies have struggled with a driver shortage over the past year, an imbalance that has pushed ride fares to record highs.
- Uber said active drivers and riders returned to pre-pandemic levels for the first time in this year's third quarter.
- Price Action: LYFT shares closed lower by 2.00% at $13.72 on Thursday.
- Photo Via Wikimedia Commons
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