Tech companies ramp up layoffs, hiring freezes as possible recession looms
The tech industry is bracing for a potential recession.
Several companies, including Netflix, Microsoft and PayPal, rolled out layoffs and hiring freezes, anticipating a downturn in the economy.
Last week, Netflix confirmed to USA TODAY it will lay off about 300 employees, its second round of layoffs this year. In May, Netflix laid off 150 employees.
"While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth," Netflix said in a statement.
Other tech companies have cut workers as worries over a recession linger:
Happiness survey:4 in 10 people are unhappy two years into the pandemic
Twitter bots:What are they and how could they mess up Elon Musk's $44 billion Twitter deal?
•Coinbase: The cryptocurrency trading platform said this month it plans to cut 1,100 jobs, about 18% of its global workforce.
•Microsoft: The tech giant confirmed to Bloomberg it will slow down hiring to better align its resources.
•PayPal: The payment processing company laid off dozens of employees at its corporate headquarters in San Jose, California, as well as offices in Chicago, Nebraska and Arizona, Bloomberg reported. "PayPal is constantly evaluating how we work to ensure we are prepared to meet the needs of our customers and operate with the best structure and processes to support our strategic business priorities as we continue to grow and evolve," the company said in a statement.
•Redfin: The Seattle-based online real estate brokerage firm said it is laying off 8% of its employees as the housing market cools.
•Robinhood: In April, the investment service said it let go of approximately 9% of full-time employees. "While this decision was necessary, it was not one we undertook lightly," CEO Vlad Tenev said in a blog post in April.
Meta, parent company of Facebook, Snap and Uber slowed down or froze hiring, Fortune reported.
Why tech layoffs, freezes are rising
The tech sector's aggressive hiring the past few years played a part in this wave of layoffs, said Wedbush analyst Daniel Ives.
"So much growth was pulled forward for tech during the pandemic," Ives said. "I think there's a normalization going on of spending, and that's exacerbated the potential slowdown for the tech sector."
Tech companies thrived during the COVID-19 pandemic, as many Americans leaned on services such as Amazon, Google and others to maintain connections to the outside world.
Angelo Zino, an analyst with research firm CFRA, said it was only a matter of time before hiring sprees cooled off. Fears of an economic downturn helped speed up that process.
"You've kind of seen more of an accelerated effort of more companies just take the foot off the gas much quicker in recent weeks," Zino said.
Ives said he views the run of tech layoffs as part of a "near-term slowdown," citing potential opportunities for growth.
"The pace of growth in areas like cloud, cybersecurity, 5G and others is massive over the coming years," he said.
Contributing: The Associated Press
Follow Brett Molina on Twitter: @brettmolina23.