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Lyft lays off hundreds and Amazon freezes corporate hiring as tech downturn persists

"The clock struck midnight" on the tech sector's post-pandemic growth, one analyst said.
A Lyft decal is seen through the window of a car in San Francisco.
Lyft executives said the cuts were necessary to become "leaner" amid “several challenges playing out across the economy.”Gabrielle Lurie / San Francisco Chronicle via Getty Images file

Lyft confirmed its plans Thursday to lay off 13% of its workforce, equivalent to about 700 employees, as the broader downturn in once high-flying tech companies persists.

In a company-wide email obtained by NBC News, Lyft executives said the cuts were necessary as the company becomes "leaner" amid “several challenges playing out across the economy.”

“We’re facing a probable recession sometime in the next year and rideshare insurance costs are going up,” the executives said, adding the cuts would occur throughout the company.

Lyft is preparing to report its latest quarterly earnings Monday. Despite the layoffs, the company is holding the line on its third quarter and full-year earnings outlook.

"We are confident in the overall trajectory of the business," the company said Thursday in a filing.

An emerging trend

Still, Lyft's announcement adds to the broader trend of hiring freezes and job cuts across the tech industry. Amazon announced Thursday it will pause hiring within its corporate workforce, citing the increasingly "uncertain" economy and the company's spate of new hires in recent years.

"We’re facing an unusual macro-economic environment, and want to balance our hiring and investments with being thoughtful about this economy," Amazon human resources director Beth Galetti wrote.

The payments company Stripe announced Thursday it was cutting 14% of its workforce, equivalent to approximately 1,100 workers.

"On Tuesday, a former Treasury Secretary said that the US faces 'as complex a set of macroeconomic challenges as at any time in 75 years', and many parts of the developed world appear to be headed for recession," Stripe co-founder and CEO Patrick Collison wrote in a note to employees. "We think that 2022 represents the beginning of a different economic climate."

The tech sector had come through a significant portion of the pandemic seeing roaring growth. But as much as it boomed, it has been quick to bust, thanks in part to higher interest rates and a decelerating economy.

Other tech companies that have announced layoffs include Netflix, Spotify, Coinbase and Shopify — while others, like Google parent Alphabet and Facebook owner Meta, have recently implemented cost-cutting measures, CNBC reported.

"The clock struck midnight," Dan Ives, managing director and senior equity research analyst covering the technology sector at Wedbush Securities, told NBC News.

"These companies were spending like 1980s rock stars, and in a darker economic climate, they’re being forced to make some difficult cuts," Ives said.

"It’s just the first step as these companies rationalize their cost structure."