It’s an old saw in business that new leadership likes to start off with a bang to mark their tenure. This will come as little comfort at ride-sharing operation Lyft (NASDAQ:LYFT), as the new CEO plans to fire about 30% of its workforce, around 1,200 jobs. That was enough to send Lyft shares up over 6% in Friday’s trading session.
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New CEO David Risher lowered the boom on the 1,200 today, noting that Lyft plans to “deliver affordable rides, compelling earnings for drivers, and profitable growth.” These things require cash to accomplish, and so that’s why the 1,200 are being shown the door. This is the third time in the last 10 months that Lyft has cut jobs. Though some of the savings will apparently go to severance packages, those who have been with Lyft for at least four years will get a minimum of 10 weeks’ pay, along with healthcare coverage through Halloween and an “accelerated equity vesting.”
The unstated, and possibly biggest, reason behind the cuts likely won’t surprise anyone – Uber (NASDAQ:UBER). Lyft has been losing ground to Uber for months, and that’s shown up in the stock price. Lyft is down close to 70% over the last 12 months. Uber, meanwhile, has only lost about 2%, which shows that Lyft is very much behind. Just over the course of 2023, Lyft has lost about 11%, while Uber actually gained 27.5%.
The differences between Lyft and Uber don’t stop there. Analyst consensus calls Lyft a Hold, while Uber is a Strong Buy. Further, Lyft does have some life in it; its average price target of $14.12 gives it 35.25% upside potential. However, Uber’s average price target of $48.19 suggests an upside potential of 56.31%.
