Thousands of workers in the tech sector suddenly find themselves without a job. The industry continues to cite changing economic conditions as the reason. But each company has slightly different reasons for the layoffs. Plus, many companies are seeing an uneven distribution of layoffs across departments.
Which companies are laying off workers?
According to layoffs.fyi, over 760 tech companies have laid off employees in 2022. Some are letting go a handful of employees. Others, like Meta and Twitter TWTR 0.0%, are laying off thousands of workers.
Let’s take a closer look at which companies are laying off workers and the reasons behind the decision.
Since Elon Musk’s deal to purchase the company finally came through, Twitter has been making all kinds of waves in the media. After the deal closed, Musk quickly fired the top brass of the company.
But the layoffs didn’t stop with the former c-suite. Thousands more Twitter employees found out they were let go last week. The estimated cuts accounted for 50% of the company’s workforce, which means around 3,700 employees were laid off.
Musk tweeted that the layoffs were necessary because the company was losing at least $4 million per day. Although everyone was reportedly offered three months of severance pay, the widespread layoffs across the company were done in a confusing way.
Many former employees reportedly found out about their termination when they were locked out of their work email and Slack accounts. Some are reporting that Twitter may want to rehire some of the laid-off employees.
Lyft recently announced that it would be laying off around 700 employees, which accounts for approximately 13% of its workforce.
In a memo to the company’s employees, Lyft’s leadership stated, “There are several challenges playing out across the economy. We’re facing a probable recession sometime in the next year and ride share insurance costs are going up.
We worked hard to bring down costs this summer: we slowed, then froze hiring; cut spending; and paused less-critical initiatives. Still, Lyft has to become leaner, which requires us to part with incredible team members.”
Based on the memo, it seems that the layoffs will be spread across all, or at least multiple, departments.
Stripe, a payments company, announced plans to cut its workforce by 14% this week. The layoffs will impact more than 1,000 employees at the company.
Stripe’s CEO, Patrick Collison, said in the announcement that the layoffs were necessary due to leadership mistakes. Specifically, Collision said leadership was “much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown.”
He continued that, “We grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in.”
In contrast to some of the other companies facing a layoff, former employees of Stripe found clear information about how the change will impact their income. For example, affected Stripe employees can find the details of severance pay, healthcare, vesting and more easily available online.
But former employees of other companies are left with vague information about their employment situation. Most notably, some Twitter employees reportedly found out about being let go when they lost access to their company Slack channel and email account.
Chime, a fintech company, announced that it would be laying off around 160 workers, or 12% of its workforce. Although the company remains reportedly well capitalized, it seems that the cuts are being made in preparation for changing market dynamics.
In June, Netflix let go of some 300 employees. That’s after letting go of around 150 employees in May. The decision to make a series of layoffs comes after the company saw its U.S. subscribers plummet by 200,000.
For those that follow the crypto markets, it might not come as a surprise that Coinbase is moving forward with layoffs in the face of depressed crypto prices. Due to the changing economic conditions, CEO Brian Armstrong, announced that the company would lay off 18% of the workforce.
In a memo, Armstrong pointed to several reasons for the changes to the workforce. Specifically, he said, “We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter and could last for an extended period.
In past crypto winters, trading revenue (our largest revenue source) has declined significantly. While it’s hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment.” He also mentioned growing too quickly and down markets as a reason for cutting workers.
With the housing market slowdown, Zillow announced layoffs of approximately 5% of its workforce, or 300 employees.
One of the major areas impacted is the company’s relatively new house flipping department. However, the company is still reportedly hiring in technology-related roles.
Meta, the parent company of Facebook, is reportedly planning a large number of layoffs later this week. Although the number of employees to be laid off is uncertain, the company’s CEO Mark Zuckerberg recently said in a conference call that he expects Meta to end 2023 “as either roughly the same size, or even a slightly smaller organization than we are today.”
As of November 10th, 13% of the workforce was laid off. With that, over 11,000 Meta employees now find themselves without a job.
The bottom line
With these tech layoffs coming in waves, investors must vigilantly protect their portfolios. As more companies announce layoffs, the stock of those companies respond to the changes. With so many companies announcing layoffs, it can be difficult for investors to stay on top of it all.
Luckily, you don’t have to keep track on your own. Instead, you can harness the power of artificial intelligence with the help of an investment kit through Q.ai.
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Source: Waves Of Tech Layoffs — Which Tech Companies Are Cutting Their Workforce And Why?
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