PayPal is the latest tech business with layoffs, 2500 jobs cut
PayPal Holdings Inc. is set to reduce its workforce by approximately 9% under the leadership of CEO Alex Chriss, who assumed the role in September. The decision aims to “right-size” the company by implementing direct cuts and eliminating open positions throughout the year. About 2,500 employees, out of the approximately 29,900 at the end of 2022, will be affected by the move. Chriss mentioned that the restructuring will enhance the firm’s agility to meet customer needs and drive profitable growth while maintaining investments in areas conducive to business expansion.
This reduction in force follows a similar initiative announced in January last year, highlighting PayPal’s ongoing efforts to navigate rising competition and address profitability challenges. The company’s shares have witnessed a decline of over 20% in the past year, driven by weakened earnings and a lowered full-year guidance for adjusted operating margin. PayPal, an early disruptor in the payments sector, now faces intensified competition from players like Apple Inc. and Zelle.
Several concerns, including heightened competition and profitability pressures, prompted at least four analysts to downgrade PayPal’s stock this month. Chriss acknowledged the challenges during the third-quarter earnings call, emphasizing the need to address the firm’s “cost base and complex structure” to enhance operating leverage.
Chriss, who succeeded Dan Schulman, has been proactive in reshaping PayPal’s leadership and streamlining operations, aiming to overcome challenges that emerged during the pandemic-induced business expansion. PayPal’s fourth-quarter results are anticipated next week.
Chriss expressed a commitment to the necessary changes, acknowledging that the company has faced challenges over the past few years. The move aligns with Chriss’s broader strategy of optimizing PayPal’s structure and focusing on essential growth areas.
In a similar vein, Block Inc., the provider of Cash App and Square payments services, initiated job cuts to reach a workforce goal of 12,000 by year-end, down from just over 13,000 reported at the end of the third quarter of the previous year.