PayPal to Cut Global Workforce by 9%, or 2,500 Jobs

PayPal Holdings, the digital payments company, is set to reduce its global workforce by another 9%, eliminating 2,500 jobs. This move comes as PayPal faces intensified competition under the leadership of new CEO Alex Chriss.

Last January, PayPal had already announced a restructuring effort which resulted in approximately 2,000 job cuts, around 7% of its global workforce. Then-CEO Dan Schulman explained that these cuts were made in response to the challenging macro-economic environment.

In a letter addressed to employees, CEO Alex Chriss stated that the job cuts would be implemented through both direct terminations and the elimination of open positions throughout the year. Employees affected by these changes will be informed by the end of the week.

Chriss emphasized the need to accelerate execution and prioritize solving customers’ most critical needs and issues. He also highlighted the importance of driving focus, efficiency, and automation, as well as consolidating technology to reduce complexity and duplication.

The purpose behind these measures, as Chriss outlined in the letter, is to right-size the business. This will enable PayPal to operate with greater agility and responsiveness in order to meet customer demands and achieve sustainable growth.

PayPal to Continue Investing in Growth Areas

In a recent announcement, PayPal revealed its plans to make strategic cuts while continuing to invest in areas of the business that are expected to drive growth. Although specific details were not provided, the company’s CEO, Chriss, expressed confidence that PayPal will emerge from this period even stronger than before.

Initiatives Set to Transform PayPal’s Role

Last Thursday, Chriss presented six initiatives aimed at transforming the company and redefining its role in the payments industry. These initiatives range from a revamped checkout process to a refreshing update of the PayPal mobile app.

Analysts’ Views on the Initiatives

Not all analysts are equally optimistic about these initiatives. Mizuho analyst Dan Dolev, while acknowledging the positive aspects of using artificial intelligence (AI) to enhance the checkout experience and offer more to consumers, expressed concern that doubling down on Branded Checkout may prove to be a long-term regret.

Similarly, BTIG analysts Andrew Harte and Thomas Smith believe that while the initiatives are a step in the right direction, they may not be groundbreaking new information for investors. These analysts argue that such initiatives should have already been expected from PayPal.

Workforce and Market Performance

As of the end of 2022, PayPal employed 29,900 people, with 40% of its workforce based in the United States. Although shares remained flat in after-hours trading following the announcement, PayPal’s stock has experienced a significant decline over the past two years, with the rise of competitors such as Apple Pay and Block gaining market share.

Upcoming Earnings Report

PayPal is scheduled to release its fourth-quarter earnings on February 7. Investors will be closely watching these results to gauge the progress and effectiveness of the company’s ongoing initiatives.