As the latest major tech company to reduce costs, PayPal is laying off about 2,000 workers, or 7% of its total workforce. The online payments firm cites “the challenging macro-economic environment” as a major factor in their decision to take this action.
The announcement by PayPal comes after numerous large tech companies have recently laid off thousands of employees. Companies like Amazon and Microsoft, as well as Google’s parent company Alphabet, have all announced large-scale layoffs this year.
PayPal CEO Dan Schulman issued the following statement: “We must continue to change as our world, our customers, and our competitive landscape evolve.” Snap, parent company of the popular messaging app Snapchat, announced on Tuesday that revenue for the quarter ending in March could fall by as much as 10% from the previous quarter.
We expect the headwinds we have faced over the past year to continue throughout Q1,” the company said to investors. Shares of Snap declined by nearly 15% in extended trade in New York following the announcement.
Why are large tech firms laying off workers, and what are the reasons for this?
More than 18,000 jobs were announced to be eliminated by Amazon at the beginning of this year due to “the uncertain economy” and rapid hiring during the pandemic.
This month has also seen announcements of 12,000 job cuts at Alphabet and 10,000 job cuts at Microsoft. Swedish music streaming behemoth Spotify announced last week it would lay off 6% of its roughly 10,000 employees in an effort to increase productivity.
On Tuesday, US computer chip maker Advanced Micro Devices (AMD) reported a 98% drop in net income for the final three months of 2022, further evidence of the technology industry slowdown.
Revenue is expected to fall by as much as 10% this quarter, the company said. Nonetheless, the numbers exceeded the expectations of many shareholders, leading to a rise in AMD stock following the announcement. On Wednesday, SK Hynix, the world’s second-largest maker of memory chips, reported its largest quarterly loss ever.
Sales dropped by 38% in the final quarter of 2022, contributing to a larger loss than expected of 1.7tn won ($1.4bn; £1.1bn). The company, like other major players in the technology sector, cited a drop in the price of computer chips as evidence that it anticipates a prolonged industry-wide slump in the near future. It followed the Tuesday announcement by Samsung Electronics, a competitor, that it had posted its lowest quarterly profit in eight years.