Paypal's Latest Layoffs - PayPal To Cut 9% Global Workforce
PayPal to cut 9% global workforce. Discover the latest decision by PayPal regarding workforce reduction.
Author:Hajra ShannonReviewer:Paolo ReynaFeb 01, 2024150 Shares74.9K Views
PayPal Holdings Inc. has revealed plans for a substantial reduction in its global workforce. The company PayPal to cut 9% global workforcethis year. CEO Alex Chriss expressed the company's intentions, stating that this move is essential to "right-size our business" as part of ongoing cost-cutting efforts.
In a letter addressed to the staff, Chriss outlined the rationale behind this decision, saying, "We are doing this to right-size our business, allowing us to move with the speed needed to deliver for our customers and drive profitable growth. At the same time, we will continue to invest in areas of the business we believe will create and accelerate growth."
A Strategic Shift for PayPal
PayPal had 29,900 employees as of the end of 2022, as per its most recent 10-K annual report, which was released nearly a year ago. This move comes after a previous 7% reduction in the workforce during the tenure of former CEO Dan Schulman.
The company's stock performance has been under scrutiny, with a decline of 61% over a two-year span and a significant drop of 79% from its all-time high in July 2021, when it reached $308.53 per share.
Wells Fargo analyst Andrew Bauch offered insights into how investors might perceive this development, stating, "We believe both bulls and bears will interpret today’s news as a validation of their respective theses."
Bauch suggested that those in the "bull camp" may see this announcement as an indication that CEO Alex Chriss is poised to fulfill his promises of margin accretive growth, drawing parallels with other tech companies that achieved productivity improvements through aggressive cost-cutting measures. Bauch even cited the example of Shopify Inc., where productivity gains were dramatic.
On the other hand, "bears" in the market might view this move as a defensive strategy, raising concerns about potential headwinds in PayPal's upcoming fourth-quarter results or in the first quarter.
Bauch maintained an "equal weight" rating for PayPal's stock. CEO Alex Chriss, who assumed his role in September, has been vocal about the necessity for PayPal to become more streamlined and focused on its core strengths. In a November earnings call, he stated, "We have lots of opportunities, but we’re doing too many things. We’re spread too thin. And we have an opportunity to focus the organization on what matters the most, on the most impactful opportunities to customers and to growing the business, and we’ll be looking at that over time."
Chriss has emphasized his desire to "instill a culture of innovation that returns our company to the true position of strength it deserves."
Colin Sebastian, an analyst at Baird, highlighted the company's newfound focus on productivity through these layoffs, stating, "We note this layoff should bring PayPal back to roughly 2019/2020 headcount levels, or even a bit below, although revenues and operating income are more than 30% higher than three years ago."
Take a look at the entire memo that Chriss sent to the entire staff:
Team,
In our last Global All Hands, I shared that to build a growth organization and unlock our true potential, we need to be honest about how we can improve. During the last few months, I have spent as much time as possible with as many of you as possible to learn about our company’s great strengths, as well as where we need to move faster, where we need to change, and what we need to do to instill a culture of innovation that returns our company to the true position of strength it deserves.
While I have been encouraged by the innovation our team is delivering, we must execute faster and ensure we are focused on solving our customers’ most critical needs and problems. Specifically, across our organization, we need to drive more focus and efficiency, deploy automation, and consolidate our technology to reduce complexity and duplication. We have started on that journey, but there is a lot of work to do – and 2024 marks a year of change, including some difficult but necessary decisions to get us to where we need to go.
Today, I am writing to share the difficult news that we will be reducing our global workforce by approximately 9% through both direct reductions and the elimination of open roles over the course of the year. We are doing this to right-size our business, allowing us to move with the speed needed to deliver for our customers and drive profitable growth. At the same time, we will continue to invest in areas of the business we believe will create and accelerate growth.
If your role is included in this workforce reduction, you will be notified between today and the end of the week. These decisions were not easy to make, and we are undertaking these actions with tremendous care and consideration. All decisions are subject to consultation, where required by law. True to our values, we will support our employees’ transitions with the utmost respect, support, and compassion.
PayPal has significant potential to create substantial value for our employees, our customers, and shareholders. Over the next year, we will work together to maximize our reach, scale, and resources, so that we can have an even greater impact for the customers we serve.
I am confident that our PayPal community will come through this period even stronger, and I am optimistic about the future we will create together.
Alex
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Hajra Shannon
Author
Hajra Shannona is a highly experienced journalist with over 9 years of expertise in news writing, investigative reporting, and political analysis.
She holds a Bachelor's degree in Journalism from Columbia University and has contributed to reputable publications focusing on global affairs, human rights, and environmental sustainability.
Hajra's authoritative voice and trustworthy reporting reflect her commitment to delivering insightful news content.
Beyond journalism, she enjoys exploring new cultures through travel and pursuing outdoor photography
Paolo Reyna
Reviewer
Paolo Reyna is a writer and storyteller with a wide range of interests. He graduated from New York University with a Bachelor of Arts in Journalism and Media Studies.
Paolo enjoys writing about celebrity culture, gaming, visual arts, and events. He has a keen eye for trends in popular culture and an enthusiasm for exploring new ideas. Paolo's writing aims to inform and entertain while providing fresh perspectives on the topics that interest him most.
In his free time, he loves to travel, watch films, read books, and socialize with friends.
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