Lyft announces layoffs of 13% of workforce in anticipation of recession
SAN FRANCISCO (CBS SF) – Rideshare company Lyft plans to announce layoffs for 13% of its workforce, or 700 employees, in a company meeting Thursday morning, stating the company was preparing for a recession and other challenges.
The company made the news public that morning in a blog post from Lyft CEO Logan Green and President John Zimmer.
"Despite efforts to avoid this day, we've made the difficult decision to lay off 13% of the team. Additionally, we are pursuing a divestiture (sale) of our first-party vehicle service business, and in that case we do expect most of those team members will be offered roles from the acquiring company," the post read.
The post states that the layoffs are a response to a possible recession next year and the fact that insurance costs for rideshare companies continue increasing. The company joins numerous other tech companies laying off workers, including Netflix, Spotify and Stripe. Fears of a looming recession come as the Federal Reserve ordered another .75% increase to interest rates earlier this week.
"We worked hard to bring down costs this summer: we slowed, then froze hiring; cut spending; and paused less-critical initiatives. Still, Lyft has to become leaner, which requires us to part with incredible team members," the post reads.
The announcement also came after the company said in a regulatory filing that it anticipates incurring in the fourth quarter of approximately $27 million to $32 million in restructuring and other charges related to employee severance and benefits costs.
The company's sales growth has been shrinking over the past year and it will report its third-quarter financial results on Monday. On Thursday, Lyft shares had fell to $14 -- a steep drop from the company's 52-week high of $57.68.
Lyft says it's providing laid off workers, ten weeks of pay, healthcare coverage through April of 2023, accelerated equity vesting and assistance finding another job. Those with more than four years with the company receive an extra four weeks of pay.
"We are not immune to the realities of inflation and a slowing economy. 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," the post added.