David Risher, CEO of ride-hailing service Lyft Inc, announced on Friday that it will cut jobs “significantly” through another round of layoffs to cut costs. The announcement sent the company’s share price jumping.
The company declined to provide details on how many employees would be affected by the move, but the Wall Street Journal previously reported that it could affect 30% of Lyft’s workforce, or more than 4,000 employees.
The decision comes weeks after the newly appointed CEO said Lyft is not for sale. The announcement disappointed some investors who had pushed stock prices last month expecting some kind of deal following the exit of the company’s founders.
Shares of Lyft (NASDAQ:LYFT) were up more than 6% since 2pm New York time on Friday, while Uber fell about 1.6%.
According to a WSJ report, Lyft expects the layoffs to cut costs in half. The company laid off about 683 employees, or 13% of its workforce at the time, in November to cut costs amidst a difficult economy and deal with fiercer competition from larger rival Uber Technologies (NYSE:UBER).
As they emerge from the worst of the COVID19 pandemic, these two ridesharing companies are in a fierce battle for market share. And investors are concerned that profits will decrease if Lyft cuts prices to close the gap with the No. 1 player in North America’s ride-sharing market.
Recent financial statements from both companies show that Uber’s global presence and more diversified business give it an edge over the US-focused Lyft.
Since April, David Risher has replaced Lyft’s two co-founders, Logan Green and John Zimmer. Green and Zimmer will assume non-executive roles as Chairman and Vice-Chair of the Board, effective April 17 and June 30, respectively.
According to a research firm recently cited by the Wall Street Journal, Uber and Lyft account for 74% and 26% of the ride-hailing market in the United States.