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Lyft has become the latest tech company to reduce its workforce in a new wave of layoffs as it restructures its bikes and scooters operation.
The ride-hailing company said the move will reduce operating costs as it focuses resources on its core business. Lyft will cut 1% of its total employees and expects between $34 million to $46 million in charges tied to the layoffs. Most of the charges will show up in third quarter figures, with the remainder in the following quarter.
Lyft Chief Executive David Risher, is restructuring the company in an attempt to take market share from rival Uber.
The job cuts are expected to boost its adjusted earnings by $20 million by the end of 2025.
Why is Lyft laying off staff?
The firm is doubling down on its core ride-hailing services while reevaluating its position in the bike hire sector. This decision comes at a time when the industry is grappling with profitability challenges and evolving urban transportation needs.
Analysts view the restructuring as a calculated risk, noting that while the bike and scooter division has shown promise in certain markets, its seasonality and maintenance costs have been a drag on the company's overall financial performance. The move to streamline operations could potentially strengthen Lyft's competitive position against industry giant Uber, which has maintained a broader portfolio of services.
Technical glitches | What's with all the tech layoffs?
The company's recent financial results paint a complex picture. Despite posting its first quarterly profit and reporting record-high scooter and bike rides in key markets like New York City, Lyft executives have expressed caution about the sustainability of the gains. The seasonal nature of the bike-sharing business, coupled with the high costs of fleet maintenance, has prompted a reevaluation of long-term strategy.
Erin Brewer, Lyft's Finance Chief, highlighted the challenges in a recent analyst call, emphasizing the impact of weather on demand for bike-sharing services. Vulnerability to external factors has likely played a role in the company's decision to explore strategic alternatives for its bikes division, including potential sales or partnerships.
The restructuring also reflects a broader trend in the tech sector, where companies are increasingly focusing on core competencies and shedding non-essential operations. Lyft's move to potentially divest or find partners for its bike-sharing business, which it acquired in 2018, aligns with an industry-wide shift towards leaner, more focused business models.
As of the end of 2023, Lyft reported a workforce of 2,945 office employees. The announced 1% reduction, while relatively small in scale, is seen as a significant indicator of the company's new direction under CEO David Risher's leadership.
All eyes will be on Lyft's upcoming financial reports to gauge the effectiveness of these strategic changes. The ride-sharing giant's ability to balance innovation with smart financial management will likely set the tone for its future in an increasingly dynamic and evolving sector.
