Ride-sharing company Lyft plans to cut at least 1,200 jobs to reduce costs, reports the Wall Street Journal. This represents about 30% of their total workforce, which is about 4,000 employees. These cuts do not include drivers who are not counted as employees. CEO David Risher sent an email to Lyft team members on April 21 which was posted to Lyft’s blog.

“We need to be a faster, flatter company where everyone is closer to our riders and drivers so we can deliver on this purpose. And we need to bring our costs down to deliver affordable rides, compelling earnings for drivers, and profitable growth. We intend to use these savings to invest in competitive pricing, faster pick-up times, and better driver earnings. All of these require us to reduce our size and restructure how we’re organized,” Risher said.

“With these changes, we have the opportunity to become the customer-focused, large-scale, profitable business we should be. It is important that we succeed: Drivers and riders want two strong companies in the market. We’re improving the lives of both. Our purpose will drive us as we create an extraordinary company together,” added Risher.  

Risher said employees would receive emails on April 27, notifying them of their status. Laid off employees will receive at least 10 weeks of pay, plus additional weeks for employees who have worked for Lyft for four or more years; healthcare coverage through October 31, 2023, including access to Modern Health; accelerated equity vesting for the May 20 vesting date; and career resources to help employees find new jobs, including coaching sessions on resumes and interviews.

This is the third round of layoffs for the ride sharing company in the last year, according to the Wall Street Journal. In November 2022, Lyft cut 700 jobs, or 13% of employees. In July 2022, they cut 60 employees.

Risher joined the Lyft board of directors in July 2021 and was officially promoted to the CEO position on April 17, just days before the layoffs were announced. He replaces co-founders Logan Green, CEO, and John Zimmer, president. Green and Zimmer remain with the company as chair and vice chair of the Lyft board.

Lyft Pink subscription service

Part of the Lyft business model includes Lyft Pink, an automatically renewable subscription program that helps frequent riders save an average of $23 per month. Starting at $9.99 a month or $99.99 a year, Lyft Pink subscribers get free priority pickup upgrades; relaxed cancellations; 5% off standard, lux, preferred and XL rides; and a free year of Grubhub+. Lyft also offers a Lyft Pink All Access subscription for $199.99 a year.)

Fourth-quarter and fiscal year 2022 financials

In February, the ride sharing company reported its fourth quarter and fiscal year 2022 financial results. For the fourth quarter, the company had revenue of $1.2 billion, a 21% increase year-over-year. However, they reported a net loss of $(588.1) million. For the full year, Lyft reported revenue of $4.1 billion, representing 28% growth year-over-year. However, they posted a net loss of $(1.1) billion for the year. Lyft plans to announce its first quarter earnings on May 4.

Lyft stock

On April 25, 2023, Lyft stock was valued at $33.91 per share. As of 1:47 p.m. EDT yesterday, Lyft stock was valued at less than a third of that at $10.32 per share.

Insider Take

Lyft has had a difficult year between the layoffs, losses and investors’ lack of faith in the company. With new leadership in place, will Lyft be able to turn things around? The 11-year-old company is earning solid revenue with double-digit growth year-over-year, but significant losses have eaten away at that revenue. While unfortunate, cutting nearly 2,000 employees in the last year will help the ride-sharing company reduce costs, but will it be enough?