From Tesla to Peloton, companies slow hiring as US economy sputters

Updated: Jun 04, 2022, 06:39 PM(IST)

Elon Musk spooked investors with a warning on the economy and plans to cut Tesla's workforce, joining a growing list of companies that have dialed back hiring amid decades-high inflation and fallout from the Ukraine crisis.

The billionaire said he has a "super bad feeling" about the economy and that the electric carmaker needs to axe about 10 per cent of its workforce.

Following is a list of some other companies that have announced layoffs or frozen hiring to rein in costs:

Alibaba Group

China's Alibaba might cut more than 15 per cent of its total workforce, or about 39,000 employees, due to a sweeping regulatory crackdown in China, as well as slowing sales growth and rising prices.

(Photograph:Reuters)

Carvana Co

Carvana said it will lay off about 2,500 employees, or 12 per cent of its workforce.

(Photograph:AFP)

Coinbase

Coinbase Global Inc will extend its hiring freeze for the foreseeable future and rescind a number of accepted offers in order to deal with current macroeconomic conditions, the company said in a blog post on Thursday.

Coinbase earlier froze hiring for two weeks as fears of rising interest rates rocked the cryptocurrency market. Now, the crypto exchange says it will pause hiring “for as long as this macro environment requires.”

“We always knew crypto would be volatile, but that volatility alongside larger economic factors may test the company, and us personally, in new ways,” said L.J. Brock, Coinbase’s chief people officer, in the blog post.

Shares of Coinbase were flat following the news in after-hours trading. The company’s stock is down more than 75% since its market debut last year through a direct listing.

(Photograph:Reuters)

Meta

Meta (formerly Facebook) has paused hirings for several verticals, like shopping and Messenger Kids, which has triggered the fear of lay offs among employees.

According to The Verge, Meta has frozen hirings for a number of products. The company recently stopped hiring for certain engineering roles and also for low-level data scientists.

Meta CEO Mark Zuckerberg, however, allayed the fears of job losses at the company.

"I can't sit here and make a permanent ongoing promise that as things shift that we won't have to reconsider that (job cuts)," Zuckerberg told the staff during a meeting.

"Our expectation is not that we're going to have to do that. And instead, basically what we're doing is we're dialing growth to the levels that we think are going to be manageable over time," he was quoted as saying in the report that came out late on Wednesday.

(Photograph:Reuters)

Netflix

Netflix in May said it has laid off about 150 people, mostly in the US, as the streaming service company faces slowing growth.

(Photograph:Reuters)

Peloton

Peloton in February said it will cut about 2,800 corporate jobs as it looks to revitalise sagging sales.

(Photograph:Reuters)

Twitter

Twitter Inc CEO Parag Agrawal said in a memo that the social media company will pause hiring and review existing job offers to determine whether any "should be pulled back".

(Photograph:Reuters)

Snap Inc

Snap Inc CEO Evan Spiegel in May told employees the company will slow hiring for this year.

Snap said on Monday it was expecting to miss quarterly revenue and profit targets set just a month earlier and would have to slow hiring and lower spending.

Valuations for social media stocks are coming back down to earth after the companies posted unprecedented growth last year when advertisers began to recover from the pandemic, said Brian Wieser, global president of business intelligence at ad agency GroupM.

"There's a resetting of expectations," he said, adding that while economic problems like inflation are partly hurting revenue, Snap and other platforms have also overestimated their ability to maintain break-neck growth.

Even so, Snap's valuation of nearly 15 times 2024 estimated earnings before interest, tax, depreciation and amortization, according to Refinitiv data, was significantly higher than Alphabet's 8.5 times and Meta's six times.

(Photograph:Reuters)

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