Lyft ＆ Amazon
Ride-sharing giant Lyft confirmed Thursday that it plans to cut 13% of its workforce, equivalent to about 700 employees, reflecting a broader trend in the tech industry facing challenges amid an uncertain economic outlook, NBC reported.
In an email obtained by NBC News, Lyft executives told all employees that the company is "streamlining" and layoffs are necessary amid "several challenges in the economy."
"We could be facing a recession sometime next year, and the cost of insurance for ride-sharing is rising," the executives wrote, noting that layoffs were being faced across the company's divisions.
Lyft is preparing to release its latest quarterly earnings report next Monday, and the layoff plan did not affect its forecast for third-quarter and full-year earnings.
"We have full confidence in the overall trajectory of the business," the company said in Thursday's filing.
However, Lyft's announcement reflects a broader trend in the tech industry with hiring freezes and layoffs. Amazon announced on Thursday that it was suspending corporate hiring due to an increasingly "uncertain" economy and a flood of new hires in recent years.
"We are facing an unusual macroeconomic environment, and we want to maintain a balance in hiring and investing, taking into account the current economic situation," wrote Beth Galetti, Amazon's director of human resources.
Meanwhile, payments company Stripe announced on Thursday that it was laying off 14% of its workforce, equivalent to about 1,100 employees. "The U.S. faces 'the most complex set of macroeconomic challenges in 75 years,' a former Treasury secretary said on Tuesday," Stripe co-founder and CEO Patrick Collison wrote in a note to employees. , many developed countries appear to be heading for recession. We believe 2022 represents the beginning of a different economic climate.”
The technology industry, which has maintained rapid growth during most of the epidemic, is facing severe challenges due to factors such as rising interest rates and economic slowdown.
Other tech companies to announce layoffs include Netflix, Spotify, Coinbase and Shopify, while others such as Google parent Alphabet and Facebook owner Meta have recently implemented cost-cutting measures, CNBC reported.
Dan Ives, managing director for the tech industry and senior equity research analyst at Wedbush Securities, told NBC News: “These companies are spending money like rock stars in the 1980s. With the economy bleak, they were forced to make some tough cuts.
"This is just the first step for these companies to rationalize their cost structures," he said.
Twitter tells employees it will announce layoffs on Friday
Twitter has notified employees that it will notify employees of the layoffs on Friday. The company did not detail the scale of the layoffs in a message it sent to employees on Thursday.
Twitter Inc. (TWTR) has notified employees that it will notify employees of the layoffs on Friday. About a week ago, billionaire Elon Musk completed the acquisition of the social media company.
The company did not detail the scale of the layoffs in a message it sent to employees on Thursday. Twitter had more than 7,500 employees at the start of the year, according to regulatory filings.
The email, seen by The Wall Street Journal, said Twitter employees would be notified by 9 a.m. PT Friday if they were affected by the layoffs.
The company's email said the layoffs were aimed at putting Twitter on a healthy path. The company also said it acknowledged that this will affect some of the people who have made valuable contributions to Twitter, but unfortunately, this action is necessary to ensure the company's successful growth.
Twitter's offices will be temporarily closed to keep employees, company systems and customer data safe, Thursday's email said. Employees who were in the office or en route to the office were asked to go home, the email said.
Previously, Twitter employees were already preparing for layoffs. The Wall Street Journal previously reported that the company was drafting a plan for widespread layoffs, with one investor saying it could cut as much as 50% of its workforce and would evaluate employees to determine the scope of layoffs.
On Wednesday, Twitter employees and people familiar with the matter ranged from more than 2,000 to nearly 3,750 layoffs, a figure equivalent to roughly half of the company's workforce at the start of the year.
Musk has long been less vocal about management roles, emphasizing the value of technical talent instead. He reiterated that sentiment shortly after taking over Twitter, responding to a user asking him what he thought Twitter's biggest problem was, tweeting Sunday that it seemed like 10 people were "managing" on top of every programming employee.
When Musk set out to acquire Twitter in April, Calacanis advised him to reduce the size of Twitter’s workforce to about 3,000 people, according to communications between Musk and his close ally, entrepreneur Jason Calacanis. The information was made public in litigation surrounding the deal.
If headcount is cut to 3,000, it would be the lowest level since Twitter went public in 2013. The platform had about 2,700 employees in 2013 and revenue was about 13 percent of last year's level.
The number of Twitter employees started climbing in 2019 and had been around 3,000 to 4,000 for several years. Twitter has said employee growth in recent years has been driven by investments in engineering, product, design and research.
Even before he officially took control of Twitter, Musk had said he was concerned about the company's spending. Twitter has lost money in eight of the past 10 fiscal years, according to FactSet.
Musk moved quickly to make personnel changes at the top of the company. Last week, on the same day he closed the deal, he fired Twitter CEO Parag Agrawal and three other executives. The Wall Street Journal reported that Musk fired the executives for a reason and said he didn't need to pay them millions in severance packages. Other executives have since left.
Overall, the social media industry is struggling with declining revenue from digital advertisers. This type of ad business has slowed for several reasons, including rising inflation, the war in Ukraine, and changes in Apple's privacy policy that have made it harder to track ad performance. Twitter rival Snap Inc. said this year it would lay off 20% of its workforce. Facebook parent Meta Platforms Inc. also said it was laying off workers.
