Image source: ABC7 Chicago
Lyft joins a host of companies making difficult decisions amid rising inflation by announcing plans for an employee layoff.
The announcement
The transport company’s announcement came Thursday as Lyft executives reconsidered staffing levels in the economic condition.
Lyft sent a letter to its staff on Thursday about the company’s decision.
Logan Green and John Zimmer, the company’s co-founders, said the layoffs will affect every part of the company.
They also pointed to the broader macroeconomic challenges that led to the severe measures.
Read also: Elon Musk set to trim Twitter employees
Statement
The memo from Lyft’s founders voiced grievances about 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.”
Slow growth
The tech industry saw a surge during the pandemic as consumers became more reliant on the digital world.
However, tech companies experienced slow growth in the September quarter as customers and advertisers began rethinking spending.
Most of the tech industry is now rethinking its investment and workforce needs.
Amazon shared plans to suspend corporate hiring on Thursday for months, citing the economic climate.
Stripe, a payment processing company and one of the most valuable startups, also announced it will lay off 14% of its staff.
Patrick Collison, CEO of Stripe, wrote to employees saying:
“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.”
Read also: Coca-Cola announce plans to change packaging for its products
Lyft
The transport company’s decision comes as Lyft’s rival Uber shared strong revenue growth fueled by demand for rides and meal delivery.
Lyft will report its earnings results on Monday.
“We are not immune to the realities of inflation and a slowing economy,” the memo reads.
The company confirmed plans to lay off more than 683 employees in a Thursday filing.
Lyft also said it would incur more than $27 million to $32 million in restructuring and related charges due to severance and employee benefits.
So far, in 2022, the company’s shares are down almost 70%.
Reference:
