In an email to employees obtained by CNBC, CEO Logan Green and President John Zimmer hinted at what they called “a likely recession sometime next year” and rising rideshare insurance costs. But Lyft isn’t currently changing the guidance it provided last quarter.
Lyft shares were slightly negative on Thursday. Shares are down nearly 68% year-to-date, taking the market cap below $5 billion.
Lyft said it has just over 5,000 employees.
Green and Zimmer said in the email that the layoffs “were based on deprioritized initiatives, an attempt to scale back management tiers, broader savings goals and, in some cases, performance history.”
For laid-off workers, Lyft promised ten weeks’ pay, health insurance through the end of April, accelerated stock exercise for the Nov. 20 exercise date, and recruitment assistance. Workers who stayed there for more than four years would be paid an extra four weeks, they added.
“We are not immune to the realities of inflation and a slowing economy,” Green and Zimmer wrote. “We need 2023 to be a time when we can do better work without having to change plans in response to external events – and the harsh reality is that today’s actions are preparing us to do so.”
We just sent out an invitation to everyone to attend an All-Hands at 11:00 am PT to share some tough news. Despite efforts to avoid that day, we made the difficult decision to fire 13% of the team. In addition, we are seeking a divestiture (sale) of our first party vehicle service business, and if so, we expect most of these team members to be offered roles by the acquiring company.
We know it will be difficult today. To provide initial context, we would like to share with you how we made this decision, how we are supporting departing team members and what to expect in the coming days.
There are several challenges playing out across the economy. We’re likely to face a recession sometime next year and rideshare insurance costs are rising. We worked hard this summer to reduce costs: we slowed down hiring and then stopped; cut spending; and paused less critical initiatives. Still, Lyft needs to slim down, which requires us to part ways with incredible team members.
The layoffs are affecting every organization in the company and have been based on deprioritized initiatives, efforts to reduce management tiers, broader savings goals and, in some cases, performance history.
We are convinced of the general business development. It was important to take these proactive actions to ensure we accelerate execution, focus on the best opportunities to drive profitable growth, and deliver strong business results in 2023 and beyond.
Support for departing team members
We understand the real impact this decision has on departing team members. Lyft will offer support to departing team members:
· 10 weeks salary.
Health coverage through April 30, 2023, including access to Modern Health.
· Accelerated grant of shares for the November 20 grant date.
· Recruitment support including CV and interview coaching sessions.
Team members aged 4+ at Lyft receive an additional four weeks of salary.
Our priority today is looking after departing team members who are also friends to many of us. While we know words are not enough, we want to thank these team members for all they have done for the Lyft community, mission, and business.
We are not immune to the realities of inflation and a slowing economy. We need 2023 to be a time when we can act better without having to change plans in response to external events – and the harsh reality is that today’s actions are preparing us to do so. It is our responsibility to take responsibility for those choices and ultimately protect the future we are building for the riders and riders we serve.
Logan & John