Lyft Inc.'s LYFT U.S. hiring freeze has analysts anticipating what the impact could be on the e-hailing industry.
What Happened: Lyft spokeswoman Ashley Adams confirmed the hiring freeze in a statement to the New York Post.
"Like many other companies navigating an uncertain economy, we are pausing hiring for all U.S.-based roles through the end of the year," Adams said.
Lyft reportedly started notifying job candidates of the hiring pause this week. The San Francisco-based company laid off approximately 60 employees over the summer, per TechCrunch.
Why It Matters: Bank of America Securities analysts have pointed out that Lyft’s careers website still lists 87 open positions, 63 of which are in international markets.
"Notably, Lyft’s statement confirmed a US freeze but not an international freeze," BofA analysts wrote in a note to clients.
The analyst firm expects the hiring freeze to lead to improved margins, but BofA maintained an Underperform rating on the stock as it still sees risk to the company's EBITDA target.
BofA noted that the freeze is a cautious sign for the rideshare market, but Uber Technologies Inc. UBER may be less impacted from a slowdown with its greater international exposure.
Both Uber and Lyft saw 4% growth month-over-month in July, but Uber's growth includes its slower-growth delivery business, which suggests that Uber's ride growth is outpacing Lyft, the analysts said.
"We think that Uber could be continuing to take share in the US, and is benefitting from the stronger recovery in international markets," BofA said.
On Monday, UBS analyst Lloyd Walmsley downgraded Lyft from Buy to Neutral and slashed the price target from $50 to $16.
UBS said it expects Lyft to grow its revenue 18% per year over the next two years, which is below average estimates for 20% growth. On the other hand, UBS expects Uber to grow around 21% each year.
Uber is scaling into newer markets and aims to transition taxi drivers to the Uber platform, the analyst said. Uber also offers better benefits for drivers, which should lead to share gains over time, he added.
"Given lack of these growth drivers, we think Lyft will under-grow the market," UBS said.
LYFT Price Action: Lyft has a 52-week high of $46.64 and a 52-week low of $11.96.
The stock was down 1.62% at $13.93 Wednesday morning, according to Benzinga Pro.
Photo: courtesy of Lyft.
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