Lyft to halt some hiring and cut budgets, citing economic slowdown

Lift company

LYFT -17.27%

It will slow hiring, reduce the budgets of some of its divisions, grant new stock options to some employees to compensate for share price erosion, and join the competition.

Uber technologies company

Uber -9.38%

In defining discounts as Investor optimism cools on technology stocks.

President John Zimmer announced the measures Tuesday in a memo to staff.

Mr. Zimmer wrote in an internal memo seen by The Wall Street Journal.

“Given the slower-than-expected recovery and the need to accelerate leverage in business, we have made the difficult but important decision to significantly slow hiring in the US,” he said.

This includes prioritizing the company for fewer initiatives, not filling many of the existing open roles and focusing in hiring on roles deemed critical, such as those that support its core riding business. He said there are no plans to lay off workers.

A person familiar with the meeting said Lyft’s board met on Friday to discuss the cuts. Another familiar person said Lyft has started sending signals to some employees recently that there will be a hiring slowdown and budget cuts.

Lyft shares have lost more than 60% since the start of the year, more than double the decline of the Nasdaq Composite Index. After dropping more than 15% on Tuesday, Lyft shares rose less than 1.5% in post-closing trading after the newspaper reported the plans.

Uber Technologies has also identified budget cuts. Uber driver in Paris.


picture:

Nathan Lane/Bloomberg News

Tech companies that have been supporting the US economy during the pandemic are suffering Punitive extension. concerns about high interest rates Reversing some of the epidemiological trends that boosted technology yields affected stock prices

Interactive Peloton company ,

PTON -8.08%

Netflix company ,

Amazon.com company

AMZN -3.21%

and others.

Amazon last month reported its slowest quarterly revenue growth in nearly two decades. Netflix lost its subscribers during the first quarter for the first time in more than a decade, and indicated the losses will continue.

apple company

AAPL -1.92%

He warned that the resurgence of Covid-19 in China could hamper sales.

shares

Explode, Explode company

Explode, Explode -43.08%

Down 43% on Tuesday After she said in Monday’s file that Adjusted revenue and profit before tax For the second quarter it will be lower than the range the company expected about a month ago due to weak advertising revenue. Other technology stocks that Rely on digital advertisingincluding the father of Google

the alphabet company

The Google -5.14%

And

Facebook

parents

ID pads company ,

FB -7.62%

also fell.

After years of adding jobs at a rapid pace, some tech companies have broadcast that they believe it is time to take a more cautious approach. The downturn by the tech giants raises questions about the general direction of the US labor market and economy.

Meta, Peloton, and Uber are among the tech companies it has announced It will slow down recruitment or re-evaluate their head count In recent weeks.

Other issues cooling the long-heated sector include inflation, labor shortages, and supply chain issues.

Uber and Lyft struggle with a Driver shortage for a year It pushed prices to record levels. The higher prices have partially led to fewer Lyft riders and fewer Uber rides than before the health crisis, even though both companies’ revenue in the first quarter exceeded pre-pandemic levels on the back of higher prices.

Lift First-quarter results overshadowed With a weaker-than-expected earnings outlook as the company said it would need to spend more money to spur drivers back. Its stock plunged more than 35% after the announcement, posting its biggest one-day percentage drop since the company went public in 2019.

earlier this month, Uber said it would cut off Marketing spending and hiring less because it focuses on making profits.

The two companies have spent a lot for years to gain customers and market share. But 2019’s public performances were a disappointment, with Wall Street increasingly wanting to see money-losing companies turn a profit.

“As we have seen and discussed, public market investors have continued to shift their focus sharply toward a potential recession and the company’s near-term profitability,” Zimmer wrote in a note on Tuesday.

He went on to write that “the near-term business plan will focus on accelerating profits – whether we like it or not, that’s the ticket to the market today.”

Uber and Lyft cut their losses, Unloading costly divisions Such as self-driving units and staff cuts during the health crisis. Both companies reported quarterly adjusted earnings before certain expenses such as interest, taxes and depreciation in the past year.

Uber said it expects cash flow to be positive on a full-year basis this year. If it achieves this goal, it will be the first time that the core operations of the combined transport and food delivery giant have generated more money than they spend.

write to Pritika Rana at [email protected] and Emily Glazer at [email protected]

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