Lyft joins Uber in 'significantly' slowing hiring and cutting budgets, but promises no layoffs: WSJ

• Lyft said in a memo that it would slow hiring and cut budgets, the Wall Street Journal reported.
• Earlier this month, its rival Uber announced similar plans for a hiring freeze.

Lyft will be scaling back on hiring and reducing budgets amid concerns of an economic slowdown, but it's stopping short of firing workers, the Wall Street Journal reported on Tuesday. The rideshare startup joins a growing list of tech companies that are finding it more challenging to be profitable.

"Given the slower than expected recovery and need to accelerate leverage in the business, we've made the difficult but important decision to significantly slow hiring in the US," Lyft President John Zimmer wrote in an internal memo shared on Tuesday, according to the Journal.

This means that the company will leave some roles open and only fill those critical to the business, the Journal said. It will also reprioritize projects to focus on those that can have the most immediate impact.

In the memo seen by WSJ, Zimmer said that the company is not planning to dismiss any workers.

Lyft did not immediately respond to Insider's request for comments.

Supply-chain concerns, the war in Ukraine, a declining stock market, and rising inflation are causing many to believe that a recession is just around the corner. In April, Deutsche Bank became the first major Wall Street bank to predict an economic slump.

Lyft's cost-cutting plans echo those of its rival Uber as the ride-sharing apps try to find ways to be profitable.

On Tuesday, Insider reported that Uber put a freeze on hiring and is reconsidering which roles should be filled and which ones should be left open. Earlier this month, CEO Dara Khosrowshahi said hiring would be treated as "a privilege."

Both companies said many drivers left their platforms during the pandemic to work as delivery drivers or found driving unprofitable because of high gas prices. Now, Lyft and Uber have to spend more to get drivers back on their platforms as they expect customers to return. They do so by dangling joining bonuses and rewarding drivers for picking up more passengers.

But Lyft and Uber may be burning cash without significant results: Some drivers told Insider they collected the rideshare apps' bonuses to join them and to pick up more passengers. After getting these payouts, they left the platforms again.

"These super high-priced offers are not getting people to go 'I'm gonna be a rideshare driver again.' People go after that money, then they stop doing Lyft," Steve Johnson, an Uber and Lyft rideshare driver in Colorado, told Insider's Tom Dotan and Nancy Luna.

"No bonus, no driving. If I wait a few weeks, they will usually try to entice me back with a '20 rides for $200' bonus. Then I'll do it," TheKizzyMan, a Reddit user who claims to be a Lyft driver, said late last year.