Lyft is laying off 17% of employees during COVID-19
Within 24 hours of Uber’s decision to drop 20% of its staff, the major competitor Lyft revealed its own cuts.
The firm today announced it will cut the number of workers by 17 percent, work down to 982 staff, and furloughing an further 288 due to the consequences of the COVID-19 pandemic and its influence on the market of Lyft.
This would also implement pay cuts of 30% for senior executives, 20% for vice presidents and 10% for all other staff, while members of the board of directors of Lyft must forego 30% of their cash salaries for the second quarter of 2020.
Lyft reported that it would be liable for restructuring, which would come to pass in Q2 financials, to between $28 million and $36 million as a result.
The news is due to the fact that 3 2,221 employees have been fired since 11 March in the technology industry. Transportation has been hit really hard, partially because people do not drive around too often as they are sitting at home, part of it because of the fears about pollution in the surrounding environment of the car.
The Lyft layoffs are part and parcel of the job discussion. Lyft drivers (and other networks across the globe for riding hailing) are likely to see equally low wages. When demand is strong, drivers will benefit from increased spending on platforms. If Lyft is reducing employees, the network investment (GMV) can easily be expected to be significantly down. This is supposed to be viewed from the point of view of the self-employed driver who is subject to a car notice despite the company’s retired 2020 guidance.
Lyft pledged $6.5 million for the “CoVID-19 drivers assistance programs” and Uber tried to help some drivers during the pandemic. The firms have discussed publicly how their apps could be helpful in the crisis, with Uber focusing on the distribution of drugs and Lyft focusing on help orgs.
Market response
Uber and Lyft had made their investors (adjusted) profitability commitments in 2020, which would doubtless have an impact on COVID-19 and travel. Earlier this year, however, Uber held a conference in which analysts vowed it was pointless even though the hailing rides cratered and remained deeply depressed for the remainder of the year.
In the wake of the news, Uber and Lyft shares rose. Today, the day after the staff cuts Uber announced and Lyft confirmed staff reductions, the companies increased 6% and 5%, respectively. Investors do not seem concerned about the disruption to operations caused by cutting workers. Nevertheless, rising share prices tend to be more justification for the cuts than an investigation as to why they were first required.
It’s the earnings season and Uber announced May 7 and Lyft a day earlier on May 6.
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