In an attempt to make up for its eroding share price, ride-hailing firm Lyft Inc. (NASDAQ:LYFT) said on Tuesday that it would slow down hiring, reduce the budgets of some of its departments, and grant new stock options to some employees.
President John Zimmer announced the measures Tuesday in a memo to staff, saying no employee layoffs are planned, joining rival Uber Technologies (NASDAQ:UBER) to rein in costs.
"It's clear from our discussions with other business leaders that every company is taking a hard look at how they respond to concerns about an economic slowdown and the dramatic change in investor sentiment." - Mr. Zimmer.
Since the start of the year, Lyft shares have lost more than 60%, more than double the decline of the Nasdaq Composite Index, and closed down 17.2% on Tuesday.
Lyft was making a name for itself as one of the nation's best-known taxi alternatives prior to the onset of COVID-19, but the pandemic changed everything.
Over the past year, ride-hailing giants have been experiencing driver shortages and have resorted to higher fares resulting in fewer riders and lower ride volumes.
In addition, the stock has also been struggling amid the broad sell-off in the tech sector, bearing the brunt of reversal trends like interest rate hikes, inflation, supply-chain issues, and labor shortages.
Bernstein analyst Nikhil Devnani believes that Lyft shares "will remain in the penalty box" until the company succeeds in retaining drivers on lower incentives and is skeptical about its long-term growth.
The analyst assumed coverage of Lyft with a Hold rating and a price target of $22, implying an upside potential of 31.58%.
Overall, consensus among Wall Street analysts is a Moderate Buy based on 16 Buys and 10 Holds.
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