On Friday, Lyft CEO David Risher announced in a memo that employee layoffs are coming next week, marking his first decision since taking over the company only five days ago. A source familiar with the matter told The Wall Street Journal that roughly 1,200 people will be laid off, accounting for 13% of the company’s workforce.
Risher told employees that their managers won’t be able to provide them with additional information until next week, but said they will receive an email telling them their employment status by 8:30 a.m. PST on April 27.
Risher’s justifications for the cuts were along the lines of the typical vagueries about being more efficient and reducing expenses.
According to the memo, laid-off employees will receive at least 10 weeks’ pay, healthcare coverage through the end of October, accelerated equity vesting, and “career resources.”
The news comes as Lyft continues to trail behind the more successful rideshare service, Uber, which has expanded its global reach and introduced UberEats, a food delivery service, to its customers. As the Journal points out, in the last 12 months, Lyft’s stocks dropped by a shocking 70% while Uber’s fell by only 4% during the same period. Following news of the layoffs on Friday, Lyft’s stocks started to rise again, increasing by 4%. Investors love a blood bath.
Although the layoffs will reportedly affect 1,200 employees, sources told the outlet that number could be much higher, reaching more than 4,000 employees equating to 30% of Lyft’s workforce. Lyft’s move is just the latest in a round of layoffs spurted by an uncertain economy and a surplus of employee hires that came on the tail-end of the Covid-19 pandemic. This will be the third round of layoffs for the rideshare company, having laid off 60 employees in July and another 700 employees in November of last year.
“David has made clear to the company that his focus is on creating a great and affordable experience for riders and improving drivers’ earnings. To do so requires that we reduce our costs and structure our company so that our leaders are closer to riders and drivers,” a Lyft spokesperson said in an emailed statement to Gizmodo.