Ride-hailing company Lyft Inc. has announced that it is freezing all hiring in the U.S. through to the end of the year amid uncertain economic conditions and rising inflation.
Reuters reports that the company, which cut 60 jobs in its rental division in July, has been battling surging expenses amid the highest inflation in the U.S. in 40 years. Costs at Lyft increased 36% in its most recent quarter, a quarter which also saw Lyft report a net loss of $377.2 million versus $251.9 million a year ago and $196.9 million in the previous quarter.
Lyft had 5,000 employees as of June 30. According to the New York Post, Lyft started notifying job candidates of the hiring freeze earlier this week.
The decision by Lyft to freeze hiring comes amid hiring freezes and layoffs in the broader tech sector, including in the ride-hailing business. Lyft’s main rival Uber Technologies Inc. was reported in May to be slashing marketing and incentive costs and treating hiring as a “privilege.”
In an email to staff, Uber Chief Executive Dara Khosrowshahi told staff that the company needs to address a “seismic shift” in investor sentiment. “After earnings, I spent several days meeting investors in New York and Boston,” Khosrowshahi said in the email. “It’s clear that the market is experiencing a seismic shift and we need to react accordingly.”
Four months later and the shift in markets amid ongoing inflation, a technical recession and the ongoing war in Ukraine that has resulted in surging energy costs has made the outlook worse again. Khosrowshahi was right to be concerned in May.
A Crunchbase report on Sept. 23 estimated that 42,000 workers in the U.S. tech sector had been laid off in mass job cuts so far in 2022. Recent layoffs include Twilio cutting 11% of its workforce on Sept. 14 and Robinhood Markets Inc. announcing the layoffs of 23% of its staff on Aug. 2. Oracle Corp. was also reported to be laying off staff on Aug. 1.
Moves to curtail hiring and reduce costs are not limited to mid-tier tech companies alone, with both Google LLC and Microsoft Corp. reported to be scaling backing hiring efforts in July and Apple Inc. on Aug. 16. Notably, it was claimed that Apple also laid off around 100 contract-based recruiters in its offices in Texas, Singapore and other locations because of changes in the company’s business needs.
Lyft shares barely moved on the news, down 0.14% in late trading after closing regular trading up 4.73% to $14.16.