Technology company Shopify has struggled after announcing that a round of mass layoffs loomed in response to economic conditions.
In an internal memo, employees learned that around 1,000 people would be terminated in the coming days. This represents nearly 10% of the total employees globally.
Most of the firings will be of recruitment, sales, and customer support position, but founder and CEO Tobi Lütke further explained, “We’re also eliminating overspecialized and duplicate roles, as well as some groups that were convenient to have but too far removed from building products.”
Responding to this news, the share price fell over 10% over the day.
In a report released on Wednesday, Shopify revised its earnings prediction, decreasing its earlier estimates by almost $40 million.
CFO Amy Shapero insisted that the company has “recalibrated [its] team to build for long-term success, and will continue to operate with rigorous discipline, investing thoughtfully into the enormous opportunity ahead of [them].”
Despite the alarming news, the stock enjoyed a moderate rebound. Nevertheless, Shopify’s share price has plummeted over 100 points since July 2021 — a loss of nearly 80% of its value. This follows the broader trend in the technology industry with other companies suffering similar downturns.
In only a year, Netflix shares have fallen over 55%, while Twitter stocks have lost 40% of their value over the same time. Similarly, Spotify’s shares also sunk roughly 50% — a loss of over 100 points.
Many companies have responded to the dip from pandemic-era highs by putting a stop to hiring or laying off significant numbers of workers.
Shopify specifically mentioned the difficulty that “persistent high inflation” poses for the industry, echoing concerns from other businesses such as Walmart, which is also struggling to remain profitable in the face of worsening economic conditions.