EBay (NASDAQ:EBAY) has become the latest technology company to announce broad-based layoffs as it contends with slowing demand and a potential recession this year.
The e-commerce company based in San Jose, California announced that it is cutting 500 jobs or about 4% of its workforce. EBay Chief Executive Officer (CEO) Jamie Iannone said the layoffs were prompted by the current macroeconomic environment and are intended to help the company focus its operations in the months ahead.
EBAY stock was down slightly following news of the headcount reduction. Over the past 12 months, the company’s share price has declined 16% to trade at $50 a share.
In an all-staff memo, Iannone said: “Importantly, this shift gives us additional space to invest and create new roles in high-potential areas — new technologies, customer innovations and key markets — and to continue to adapt and flex with the changing macro, ecommerce and technology landscape.” EBay said that the employees who are losing their jobs will be informed over the next 24 hours.
After getting a boost during pandemic lockdowns, eBay has struggled over the last year. The company most recently reported that its sales volumes declined 5% in last year’s third quarter. EBay’s operating margin slipped to 25% from 29% through the first three quarters of 2022. The company next reports earnings on Feb. 22.
Why It Matters
EBay is the latest tech company to eliminate staff positions in an economic environment that has become more uncertain in recent months. Since late last year, dozens of tech workers have been laid off, including 18,000 at Amazon (NASDAQ:AMZN), 12,000 at Google parent company Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), and 10,000 at Microsoft (NASDAQ:MSFT).
The layoffs at eBay are yet another sign that technology companies are slowing spending after more than a decade of rapid growth and hiring. Persistently high inflation and rising interest rates are slowing the global economy and making it more difficult for fast-moving start-ups and established tech firms to borrow the money they need to fuel their growth. How long the current downtrend lasts is anyone’s guess.
EBay Layoffs and EBAY Stock: What’s Next
EBAY stock appears to be having a muted reaction to news of the layoffs. This could be a sign that investors view eBay’s headcount reduction as not that serious, or that they have become accustomed to announcements of layoffs at major tech firms. Either way, the trend of layoffs in the tech sector shows no signs of stopping soon.
On the date of publication, Joel Baglole held long positions in GOOGL and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.