Lyft to Lay Off 13 Percent of Staff in Inflation-Induced Cost-Cutting Push

The Lyft Driver Hub in Los Angeles, Calif., on Mar. 20, 2019. (Lucy Nicholson/Reuters)

Ride-sharing company Lyft is laying off 13 percent of its staff, or about 700 employees, excluding drivers, as part of cost-cutting measures amid decades-high inflation in the U.S. economy where the company operates primarily.

“We are not immune to the realities of inflation and a slowing economy,” said Lyft co-founders Logan Green and John Zimmer on Thursday in a company email. “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. It’s our responsibility to take ownership of these decisions and, in the end, protect the future we’re building for the drivers and riders we serve.”

Lyft is scheduled to announce its third-quarter 2022 financial results on Nov. 7, and the layoffs are part of the company’s plan to deliver better results in the following quarters.

The founders talked about the state of the economy, including “facing a probable recession sometime in the next year.” Besides that, ride-share insurance costs are going up, they said, adding that the company needs to “become leaner,” which require letting go of employees.

Lyft currently employs more than 5,000 workers, excluding drivers. The California-based company laid off less than 2 percent, or 60 staff members, in July, after slowing down hiring and reducing budgetary expenses during prior months.

Lyft promised 10 weeks of pay to employees who are laid off, with health care coverage through April 30, 2023. Staff who have been working for more than four years are eligible for an additional four weeks of pay.

Business Decisions, US Tech Sector

According to calculations by Reuters, Lyft’s decision to downsize will result in a charge of $27–32 million during the fourth quarter, and expected revenues of $1.04–1.06 billion and adjusted core profit of $55–65 million in the third quarter.

The company’s share price has fallen nearly 70 percent since the beginning of 2022, and is trading at $13.91, as of Thursday afternoon. Lyft has fallen almost 80 percent from last year’s height of $66.56, on Mar. 19, 2021.

The economic downturn has affected many companies in the United States, especially those in the tech sector. Shopify, Spotify, Coinbase, Netflix, and Stripe, for example, have announced layoffs, while behemoths like Amazon, Alphabet, and Meta have taken measures to reduce costs.

Lyft’s competitor Uber has fared relatively better, and is down by more than 34 percent since the beginning of the year. In May, the company announced that it’d be slowing hiring. Uber Eats, the company’s food-delivery section, was a key revenue generator during pandemic lockdowns.