Buy-it-now and pay-later giant Affirm announced on Wednesday afternoon that it was cutting 19% of its workforce – around 500 people – alongside the income results which missed analysts’ expectations.
Context: The reduction will bring the company back to the size it was “between 6 and 12 months ago,” CEO Max Levchin said. writing in a note to employees.
- “The root cause of where we are today is that I moved too slowly [as] macroeconomic shifts have unfolded,” he said, citing a “mid-2022” shift as the Fed hiked rates.
- Levchin’s reported error also comes as Affirm had already cut 1% of its staff towards the end of last year.
The big picture: E-commerce business leaders have often spoken of the “training effect“The pandemic has had on their industry.
- In other words, the demand they would have seen in years to come came at the same time during shutdowns and lockdowns.
- When payment platform Stripe announced a 14% staff cut last fall, CEO Patrick Collison said they were “far too optimisticon how quickly internet businesses would grow in the near term, expecting this drive demand to continue.
What to watch: Affirm shares plunged as much as 21% after hours on Wednesday.