Due to economic slowdown, Lyft has joined its rival Uber in cutting back on hiring and other expenses. But it promised that there will be no layoffs, according to The Wall Street Journal.
"Given the slower than expected recovery and need to accelerate leverage in the business, we've made the difficult but important decision to significantly slow hiring in the US," Lyft President John Zimmer reportedly wrote in a memo to staff.
Lyft is Not Planning to Dismiss Any Workers
There will be no layoffs planned. Zimmer, in a memo, said that Lyft is not planning to dismiss any worker.
However, the decision to cut back on new hiring will leave some roles open. The memo further stated that the company will instead focus on critical roles that support its core rides business.
Lyft also said that it will reprioritize projects to focus on those that can have the most immediate impact, as per the Business Insider.
Many believe that a recession is just around the corner due to supply-chain concerns, the war in Ukraine, a declining stock market, and rising inflation. In fact, in April, Deutsche Bank became the first major Wall Street bank to forecast an economic slump.
Like its rival Uber, Lyft's cost-cutting plans show the ride-sharing app's attempt to find ways to be profitable.
The economic slowdown hits the tech companies hard. Amazon reported its slowest growth in nearly 20 years and Snap shares declined 43 percent after it reported earnings yesterday, according to Engadget.
Having lost more than 60 percent of its value since the beginning of 2022 and with a 15 percent decline alone yesterday, Lyft has been hit particularly hard by the economic slowdown.
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Uber is the First One to Freeze Hiring
According to the Business Insider report on Tuesday, Uber put a freeze on hiring and is reconsidering which roles should be filled and which ones should be left open.
Uber CEO Dara Khosrowshahi said earlier this month that hiring would be treated as "a privilege."
According to Lyft and Uber, many of their drivers left their platforms during the pandemic to work as delivery drivers. Some drivers also found driving unprofitable because of high gas prices.
Currently, as both companies expect customers to return, Lyft and Uber have to spend more to get drivers back on their platforms. The companies try to dangle them with bonuses and rewards for picking up more passengers.
However, according to the Business Insider, Lyft and Uber may be burning cash without significant results as some drivers claimed that they collected the rideshare apps' bonuses to join them and to pick up more passengers. But after getting these payouts, they left the platforms again.
"These super high-priced offers are not getting people to go 'I'm gonna be a rideshare driver again.' People go after that money, then they stop doing Lyft," Steve Johnson, an Uber and Lyft rideshare driver in Colorado, as cited by the Business Insider.
A Reddit user, TheKizzyMan, who claims to be a Lyft driver said that no bonus, no driving and if he wait for a few weeks, the ridesharing app will usually try to entice him back with bonuses.
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