Photo: A Carvana car retail "vending machine" in South Fayette, Pa, March 15, 2021. (AP Photo/Ted Shaffrey, File)
The tech industry, which defied gravity for the past decade, appears to be experiencing the heat a rocketship might encounter upon reentering the Earth’s atmosphere as it begins laying off employees, even as other industries add jobs.
Since recovering from the dot-com bust, Big Tech and tech startups have boomed but now layoffs are affecting companies from a post-Series A startup to a recent SPAC.
Amid the talk in Silicon Valley that hiring is slowing and more layoffs are coming, there’s a growing hum about the coming recession.
Facebook stock is down more than 40 percent this year after enjoying an annual growth rate of more than 40 percent. The company recently told employees that it would freeze hiring.
“Heard from a D1 at Facebook that Facebook will layoff ~12% of its staff. He stated that slowing growth and declining users especially in core Facebook platform is accelerating. Will be announced mid June, hang in there!” an anonymous user posted April 26 on the professional network community app Blind.
It’s not only tech companies that are laying off.
In the superheated job market after covid-19 restrictions lifted, the economy reopened and businesses couldn’t find enough workers. Prospective employees often had choices. The Department of Labor reported earlier in May that the U.S. added 428,000 jobs in April, and unemployment is at 3.6 percent.
However, events could cause a slowdown in the U.S. job market. Stocks have plummeted and inflation is driving up costs with no ceiling in sight, stoking fears of a recession. There’s uncertainty about rising interest rates and the U.S. getting involved in a war with Russia.
Some experts say it’s not time to panic yet.
The U.S. is seeing changes in the economy and labor market due to changes in consumer behavior as the pandemic recedes and the Fed starts to raise interest rates.
But these are the “normal sorts of ebbs and flows that we see during expansions—not an indication of imminent recession,” PNC Chief Economist Gus Faucher said in a Fortune interview. “I wouldn’t read too much into individual company announcements.”
Here are 10 companies that have started laying off employees.
The online used-car company Carvana with its signature “vending machine” towers plans to lay off about 2,500 employees — more than 10 percent of its staff — as its stock price plummets and it takes on new debt.
Used cars were one of the top beneficiaries of the pandemic. Many car buyers turned to the internet, “flush with cash from the federal stimulus and fearful of in-person shopping even after restrictions eased,” Barrons reported.
However, the market has been less favorable recently, Carvana CEO Ernie Garcia told workers in an email. “It is an understatement to say a lot has changed about our environment,” he said. “Inflation and interest rates are up, supply chains are disrupted, and consumer and investor sentiment have shifted.”
Carvana has 56 Adesa U.S. locations in 6.5 million square feet of buildings and 4,000-plus acres.
Silicon Valley-based cryptocurrency broker Robinhood laid off 340 people, 9 percent of its workforce, on April 26, 2001, citing “duplicate roles and job functions” after rapid expansion in 2021.
Known for pioneering a “revolutionary” new online trading model with commission-free trades of stocks, exchange-traded funds and cryptocurrencies, the Robinhood mobile app was introduced in March 2015.
People locked down in their homes during the coronavirus pandemic discovered day trading on their mobile phones, setting off a frenzy among retail traders.
“Online trading platforms, such as Robinhood, have contributed to creating a crowd of untrained and inexperienced individuals who often approach the market in a non-scientific way, using none of the deterministic approaches or tools that professional investors use to analyze stocks movements and liquidity and solidity of public rated companies,” Matteo Girello wrote in a blog for Bocconi Students Capital Markets.
The layoffs are a “deliberate step to ensure we are able to continue delivering on our strategic goals and furthering our mission to democratize finance,” Robinhood CEO Vlad Tenev said in a blog post.
Mortgage lending company Better.com laid off 3,000 people on March 8 — a third of its workforce — after hiring aggressively during the pandemic and quadrupling in size when mortgage rates were low and the online lending market was expanding.
The company struggled lately because of fluctuations in the real estate market and the expectation that the Federal Reserve would raise interest rates, New York Times reported.
In an earlier round of layoffs, Better.com CEO Vishal Garg caused an outcry when he fired more than 900 employees on a Zoom call.
Cameo, a Chicago-based celebrity shoutout app with about 350 employees, announced in early May that it was laying off more than 80 employees — about a quarter of its workforce. The app lets users pay for personalized videos from their favorite celebrities and it became a pandemic darling as demand rose for online video entertainment due to covid-19 lockdowns.
The company has raised $165 million and achieved unicorn status with a $1 billion evaluation a year before the layoffs were announced. The job cuts follow two years of expansion, a partnership with Japan’s SoftBank, and a new ticket feature called Cameo Pass with blockchain-based tokens. In early May, Cameo and Snap announced a partnership where advertisers can tap into Cameo’s celebrity and influencer pool to create ads for Snapchat, according to The Information.
On Deck, a Silicon Valley tech company that connects startup founders to funding, advice, and each other, said it is laying off about 72 people — a quarter of its staff.
Since launching two years ago, the company claims to have helped founders start more than 1,000 companies. It also started an accelerator program, ODX, that offers a $125,000 check and support in exchange for 7 percent of a company. It has backed 150 companies to date.
Thrasio, a startup that is credited with helping create the Amazon aggregator segment and was recently valued at $10 billion, is laying off staff and has announced a new CEO, according to a leaked memo.
The company had raised $3 billion and planned to go public before things went off track.
One of the larger startups buying and consolidating third-party Amazon sellers, Thrasio, which has 380 U.S. employees, planned to start laying off employees in the first week of May. Two sources close to the matter said the layoffs could impact up to 20 percent of staff.
Amazon aggregators compete to buy the most successful brands on the site and improve their marketing, packaging, and positioning to increase their profitability. After several top executives left the company, Thrasio canceled plans in October 2021 to go public via a SPAC, CNBC reported.
In the memo sent to staff announcing layoffs, company executives referred to growth management issues. “At times we have been acquiring a new company almost every week and running hard to build the infrastructure to support this growth,” the memo said.
Months after flying its entire company to the luxurious Grand Wailea Hotel in Maui in January 2022 for a week-long working vacation, San Francisco-based business-to-business financial-services startup MainStreet said it was laying off 45 people — about 30 percent of its staff. The layoffs may have been connected to a smaller-than-expected Series B funding round.
“We took this action because we believe that there is a very strong chance that today’s incredibly rough market is only going to get worse, and potentially remain so for months, if not years,” MainStreet CEO Doug Ludlow wrote in an email to staff. He cited difficult market conditions and a push toward profitability.
Netflix has started laying off employees — mostly Black women and women of color — from its new fan-focused website, Tudum, named for the sound of the Netflix logo. About 10 to 12 writers and editors lost their jobs shortly after the company announced that it has lost subscribers, and its stocks took a nosedive.
“They went very out of their way to hire high-level journalists of color who have quite a bit of name recognition and a lot of experience and talent. In some ways, they were just buying clout to lend credibility to their gambit,” a former employee told NPR.
The layoffs fueled fears that the streaming content bubble has finally burst, and consolidations are on the way, Variety reported.
Netflix may also be curtailing content spending. It canceled “Pearl,” an animated series developed by Meghan Markle and Prince Harry’s Archewell Productions.
One of the largest truckload carriers in the U.S., Chattanooga, Tennessee-based U.S. Xpress announced that it is laying off 5 percent of its corporate workforce after reporting an $8.9 million loss in the first quarter.
The cuts will affect 70 of the company’s 1,400 office employees who work mainly in information technology, operations and back-office support, according to Brad Carmony, VP of brand communications for U.S. Xpress.
“In recent months, our truck count and revenue has not grown at the same rate as our headcount,” Carmony said in a statement.
The company’s chief technology officer was also terminated, according to paperwork filed with the U.S. Securities and Exchange Commission.
“The tech organization remains key to our long-term success. Right now, we’re focused on establishing a more defined, structured, disciplined approach,” Carmony said.
The company has also had management changes in its subsidiary, Variant, a tech-driven truckload carrier venture, after dismissing the company’s president, Cameron Ramsdell, in December, according to Freightwaves.
The Belvidere Auto Assembly Plant in Belvidere, Illinois, which had close to 5,000 workers in 2019, now has less than 1,500 and recently announced plans to eliminate more jobs in May, according to the Rockford Register Star.
Jeep Cherokee sales declined 34 percent in 2021 and the industry faces a global microchip shortage. Production was down nearly 40 percent at the assembly plant in the first quarter, which is taking its toll on the plant’s supplier companies, according to Belvidere Mayor Clint Morris.
“Everything from stamping to upholstery. The suppliers have definitely made cutbacks and they’re feeling the strain of a smaller workforce at the assembly plant,” Morris said.
Community leaders hope to retool the plant to assemble electric vehicles or a hybrid model. “We would also like to see a battery plant here to supply batteries for the electric vehicles or the hybrid vehicles to the assembly plant,” said Pam Lopez-Fettes, executive director of the economic development agency Growth Dimensions.
Photo: This aerial image taken with a drone, shows a Carvana car retail “vending machine” and vehicle parking lot in South Fayette, Pa, on March 15, 2021. Online automotive retailer Carvana Co. says it’s letting go about 2,500 workers, roughly 12% of its workforce, as it tries to bring staffing and expenses in line with sales. The Phoenix company said in a regulatory filing Tuesday, May 10, 2022, that its executive team is giving up salaries for the rest of the year to help fund severance pay for the workers. (AP Photo/Ted Shaffrey, File)
