Lyft plans to lay off nearly 1,000 employees and furlough another 300 because of the impact of the coronavirus on the ride-hailing business.
The layoffs and furloughs, announced Wednesday, represent 22% of Lyft’s workforce, which totaled 5,700 in December.
Additionally, Lyft will cut salaries over the next 12 weeks by 30% for top executives, 20% for vice presidents, and 10% for employees. Board members will forgo 30% of their cash compensation during the second quarter.
“It is now clear that the COVID-19 crisis is going to have broad-reaching implications for the economy, which impacts our business,” Lyft CEO Logan Green said in an emailed statement. “We have therefore made the difficult decision to reduce the size of our team. Our guiding principle for decision-making right now is to ensure we emerge from the crisis in the strongest possible position to achieve the company’s mission.”
Lyft’s layoffs come a day after a report from news site The Information said Uber is also considering job cuts that would affect up to 20% of its workforce. Both Uber and Lyft have suffered severe slowdowns of their ride-hailing businesses, as people stay home during the pandemic. It also comes just a few months after both companies, which have been reporting multimillion-dollar losses since going public, said they would become profitable, minus certain accounting expenses, by or in 2021—plans that most likely have been derailed by the virus.
Lyft’s stock was up 5% in midday trading on Wednesday to $34.45, signaling investor support for the cuts. Those layoffs are expected to cost up to $36 million during the second quarter, primarily for employee severance and benefits, according to a regulatory filing.
Lyft will report its earnings on May 6, and Uber on May 7, giving investors a better understanding of how much revenue declined for both companies due to the virus. Last month, Uber CEO Dara Khosrowshahi told investors that the company would survive the crisis, given its “strong” balance sheet and $10 billion in unrestricted cash. He also said that the company was “extensively” stress-testing its business model, and suggested that Uber would emerge from the crisis.
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