PayPal (PYPL) – Layoffs – February 3, 2024
PayPal will reportedly fire 9% of its employees. I’ve said this needs to happen many times, but it still stinks. These are still real human beings being materially and negatively impacted. I hope they all expeditiously find great jobs in what is a robust job seeker market.
This was a necessary move for PayPal. The mistake was hiring way too many people through the pandemic. This is the unfortunate right-sizing. For context, as of its last update, PayPal earned about $80,900 in net income per employee. Google, for example, earns $400,000 in net income per employee. I realize that this comp isn’t apples-to-apples at all. Still, Google represents a strict trend, not an anomaly. And I intentionally used Google due to its widely publicized headcount bloat. PayPal’s is 5x worse. PayPal can do much more with much less. This news and Chriss telling us it will exit speculative, less profitable businesses are great signs that it will do just that. There is so much cost-cutting left to be done here. That can allow EBIT and net income to keep briskly growing while transaction margin is expected to bottom and become another needed profit lever.