Lyft joins a host of companies making tough decisions amid rising inflation by informing employees about layoff plans.
The transport company’s announcement came on Thursday after Lyft executives reconsidered staffing in light of the economic situation.
Lyft sent a letter to its employees on Thursday regarding the company’s difficult decision.
Logan Green and John Zimmer, the company’s co-founders, said the layoffs would affect all parts of Lyft’s business.
They also pointed to the broader macroeconomic challenges that led to the tough cuts.
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The memo from Lyft’s founders expressed regret over the decision, writing:
“We know today will be hard. We’re facing a probable recession sometime in the next year, and rideshare insurance costs are going up.”
“We worked to bring down the 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 tech industry saw a surge during the pandemic as consumers became more dependent on the digital world.
However, technology companies experienced slow growth in the September quarter as customers and advertisers reconsidered spending.
Most of the tech industry is now rethinking its investment and workforce needs.
Amazon also shared plans to suspend hiring corporate positions for months on Thursday, citing the economic climate.
Additionally, Stripe, a payment processing company and one of the most valuable startups, also announced it will lay off 14% of its staff.
Stripe CEO Patrick Collison wrote to his employees and said:
“We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown.”
The ride company’s move comes as Lyft rival Uber saw strong sales growth, fueled by demand for rides and food delivery.
Lyft will announce its financial results on Monday.
“We are not immune to the realities of inflation and a slowing economy,” the memo states.
The company, on Thursday, confirmed its intention to lay off more than 683 employees.
Lyft also said it would incur more than $27 million to $32 million in restructuring and related costs due to severance and employee benefits.
So far, in 2022, the company’s shares are down nearly 70%.