According to a press release posted on the company website on Tuesday, Paypal has decided to lay off 2,000 workers, or roughly 7% of its workforce.
PayPal is attempting to address the “challenging macroeconomic environment,” as stated by CEO and President Dan Schulman in the release. Even though the company has made some headway in right-sizing its cost structure and refocusing on its core priorities, he acknowledged that more needs to be done.
Schulman wrote about the layoffs, saying, “Change can be difficult — particularly when it includes valued colleagues and friends departing.” Together, we will tackle this challenge head-on by leveraging our global platform’s unparalleled size, the strategic investments we’ve made to bolster our core competencies, and the support of our devoted clientele.
PayPal stock closed up 2% Tuesday.
This round of layoffs is the latest in a string of tech industry layoff announcements; on the same day, Workday said it would be eliminating 525 positions. This month, Google, Microsoft, and Salesforce all announced massive layoffs totaling in excess of 12,000.
In a press release, PayPal CEO and President Dan Schulman acknowledged the “challenging macroeconomic environment” and pledged the company’s efforts to improve it. Dan Schulman acknowledged that more work needed to be done despite the company’s “substantial progress in right-sizing our cost structure and focused our resources on our core strategic priorities.”
“Like other tech companies, PayPal is seeking to position itself financially and strategically, bracing for an economic slowdown,” Moshe Katri, analyst at Wedbush, was quoted by Reuters as saying.
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To quote Reuters: “tech over-hired during the pandemic and rationalising staff during a soft period will help them to retain margins as conditions recover.” This is according to Thomas Hayes, chairman and managing member at investment firm Great Hill Capital.
To prepare for a potential economic downturn, PayPal reduced its annual revenue growth forecast in November and stated that it did not anticipate significant growth in its U.S. e-commerce business during the holiday quarter.
When asked why they were so conservative with their outlook, company executives cited the difficult macro environment and slowing e-commerce trends.
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“We’re operating in an environment where we think we’ll continue to have inflationary pressures, where real wage growth will continue to be negative for a period of time, and where discretionary spend will be under pressure,” Rabinovich said. To put it another way, “we’re navigating that environment as best we can,” adding that “we’ve taken into consideration that range of outcomes on volume growth and on revenue growth as it relates to what we think we can deliver from an operating margin and EPS standpoint.”