Internet giants that saw their businesses grow during the pandemic have taken a beating from inflation, war, supply-line problems and people returning to the pre-Covid lifestyle.
Belt-tightening has been a common theme as major tech companies reported gains for the first three months of this year.
Facebook parent Meta told analysts its hiring targets were being adjusted as it continued to see a bright future.
“We regularly re-evaluate our talent pipeline based on our business needs, and in light of the spending guidelines given for this revenue period, we are slowing growth accordingly,” a Meta spokesperson told AFP.
“However, we will continue to grow our workforce to ensure we focus on long-term impact.”
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Seattle-based Amazon, the second-largest employer in the United States, revealed that its ranks are overly chubby after it ended last year with more than twice as many employees as it was in 2019.
As the spread of the Omicron variant of Covid-19 eased in the first quarter of this year and employees returned from time off, Amazon “moved quickly from understaffed to overstaffed,” Chief Financial Officer (CFO) Brian Olsavsky told analysts.
Twitter confirmed it has completely suspended hiring and has even shown some senior executives the exit as it faces a takeover by Elon Musk, the world’s richest person.
Musk sent mixed messages on Friday about his proposed Twitter acquisition.
In an early tweet, Musk said the $44 billion acquisition was “temporarily on hold” pending questions about the social media company’s estimates of the number of fake accounts, or “bots.”
Two hours later, the unpredictable Tesla CEO tweeted that he was “still committed to acquisition.”
“Our industry is currently in a very challenging macro environment,” Twitter chief executive Parag Agrawal said in a tweet on Friday.
“I will not use the deal as an excuse to avoid important decisions for the health of the company, nor will I be a leader at Twitter.”
At ride-share pioneer Uber, chief executive officer (CEO) Dara Khosrowshahi said they “will consider hiring a privilege,” according to an email to employees seen by CNBC.
While big tech players have avoided budget-driven layoffs, that’s not the case for stock trading platform Robinhood or Cameo, an app that sells custom video messages from celebrities.
Robinhood said in April it will cut nearly 350 jobs, about 9 percent of its workforce. Cameo recently canceled the contracts of 80 employees, reports the news website The Information.
Reasons behind the cuts
Reasons for renting curbs, freezes, or cuts vary. Meta, for example, blamed a tweak Apple made to software running its popular mobile devices that hinders the collection of user data to target ads more effectively.
Uber, meanwhile, reported that it had suffered a major loss in the first three months of the year, despite an uptick in its ride-share business.
The loss was almost entirely due to the revaluation of its holdings in Asia’s Grab and Didi and US-based autonomous driving company Aurora, the earnings report said.
However, a common factor for many internet companies has been that rapid hiring as demand increased during the pandemic has led to overweight in lesser times.
“Many tech companies have met this demand with remarkable growth in digital services, and as such have recruited and expanded their businesses over the past two years,” said Terry Kramer, an assistant professor at UCLA business school.
“A fair part of what we’re seeing now, I think, is the normal maturity of technology adoption — where companies can’t/don’t have to keep growing at the same rate.”
Another factor that weighs heavily is inflation, which has pushed up total costs and squeezed consumer budgets.
The US central bank has steadily raised interest rates this year, making it more expensive for companies to borrow money.
On Wall Street, an S&P 500 index, made up of tech sector stocks, is down more than 22 percent since the beginning of the year, and the tech-heavy Nasdaq has fallen slightly more overall.
Wedbush analyst Daniel Ives advised investors not to fear a repeat of the epic Dotcom crash of the late 1990s.
“This is not a Dot-com Bubble 2.0,” Ives said in a note to investors.
“It’s a massive overcorrection in a higher-speed environment that will create a split tech tape, with obvious haves and have-nots.”