It looks like the “Big Tech Layoff Club” just keeps getting bigger. Reportedly, PayPal (NASDAQ:PYPL) just disclosed plans to lay off 2,000 workers. This could help PayPal improve its top and bottom lines over time. Still, today’s PYPL stock traders don’t seem to be very enthusiastic.
PayPal’s headcount reduction will equate to roughly 7% of the company’s workforce. The timing of this announcement is interesting, as PayPal is set to report its fourth-quarter 2022 earnings very soon, on Feb. 9.
It’s not difficult to see why the company would reduce its headcount. Businesses have been spending less lately, due to high inflation and recession fears. Consequently, management feels the need to cut back on expenditures.
CEO Dan Schulman says that PayPal has “made substantial progress in right-sizing our cost structure.” Yet, Schulman also acknowledges that the company has “more work to do.”
Could this mean that more layoffs are coming? That’s a possibility employees and PYPL stock investors may want to bear in mind. In any case, let’s check in and see how PayPal shares are moving today.
What’s Happening With PYPL Stock?
As of this writing, PYPL stock hasn’t moved much. Earlier this morning, it was trading flat to slightly up for the day. Now, shares are down by just 1%. It’s possible that financial traders aren’t very impressed with PayPal’s cost-reduction efforts and want to see more action on that front. Or, maybe they’re just busy focusing on today’s big Federal Reserve interest rate hike announcement.
That said, analyst Brett Horn is definitely paying attention to the company’s future prospects amid a challenging economic landscape. Horn feels that PayPal has more room to cut its costs. At the same time, the analyst believes PayPal has the potential to “meaningfully improve margins over time.”
So, PYPL stock could still rally on the layoff news. For the time being, though, investors aren’t buying with both hands.
On the date of publication, David Moadel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.