Carvana is cutting off around 1,500 employees, or 8% of its workforce, on Friday, following a rapid slide in the company’s stock this year, a weaker used vehicle market, and concerns about the company’s long-term future.
The layoffs add to an increasing number of tech-related job cuts in the face of rising interest rates, persistent inflation, and economic crisis fears. Carvana has likewise experienced quick expansion, but has made certain mistakes during the coronavirus pandemic in order to benefit on an unprecedentedly strong used vehicle market.
The email from Carvana CEO Ernie Garcia, titled “Today is a hard day,” cites economic headwinds including higher financing costs and delayed car purchasing. He says the company “failed to accurately predict how this would all play out and the impact it would have on our business.”
“Today is a difficult day. The world around us has continued to get tougher and to do what is best for the business, we have to make some painful choices to adapt,” Garcia wrote in the Friday email to employees.
In Friday afternoon trade, the company’s stock was down 7%. Carvana’s stock has fallen by over 97% this year after reaching an all-time intraday high of $376.83 per share on August 10, 2021.
According to the letter, the layoffs primarily affect staff in Carvana’s corporate and technology divisions, as well as some operational positions where the company is “eliminating roles, locations, or shifts to align our size with the present climate.”
Employees who are affected will receive separation and severance compensation, extended health-care coverage for three months, and other perks, according to Garcia.
The layoffs come two weeks after the company’s stock dropped after missing Wall Street’s top- and bottom-line estimates for the third quarter. Carvana reported revenue, profit, and sales reductions from the previous year.