Dive Brief:
- Digital payments juggernaut PayPal told employees that it’s cutting 2,000 workers, or about 7% of the company’s employees, in the next few weeks.
- The San Jose, California-based company said that the reduction in force was necessary to adapt to changes it faces with respect to customers, competitors and the world.
- “Addressing these changes requires us to make hard decisions that will impact some of our colleagues,” PayPal CEO Dan Schulman said in a Tuesday note to employees posted on the company’s website. “These reductions will occur over the coming weeks, with some organizations impacted more than others.”
Dive Insight:
The PayPal job cuts follow a $2-billion investment in the company last year by Elliott Investment Management, an activist investor that often pushes companies to increase profitability in the interest of boosting stock prices. The value of PayPal’s shares have declined since mid-2021 as it missed growth goals and pivoted to new strategies.
Schulman said the company’s plans would include cost cuts after reporting a second-quarter loss in August 2022. PayPal targeted $900 million in expense savings for last year aimed at rolling into additional savings of $1.3 billion this year. “We are meaningfully reducing our cost structure,” Schulman said on that earnings webcast last August.
Elliott is egging on the restructuring. “PayPal has an unmatched and industry-leading footprint across its payments businesses and a right to win over the near- and long-term,” an Elliott partner said in an August statement last year. “Today’s announcement highlights a number of steps that have been underway and are being initiated to help realize the significant value opportunity.”
Schulman has focused the company on new priorities, such as simplifying the way consumers can use PayPal’s checkout process online and at in-store retailers, but a difficult economic environment has depressed consumer spending. Meanwhile, fintech competitors have proliferated in recent years.
His efforts have also been complicated by the loss of some top PayPal executives. Chief Financial Officer John Rainey exited in May 2022; a new CFO took a medical leave last September; and more recently the company’s chief accounting officer left this month.
Editor’s note: This story is developing and will be updated.
