PayPal plans 7% layoffs as fintech firms battle economic slowdown

PayPal Holdings Inc said on Tuesday it is planning to cut 7% of its workforce, or about 2,000 employees, the latest in a list of fintech firms that have been hit by the economic slowdown.

The payments firm joins Wall Street titans and Big Tech firms that are executing layoffs across corporate America as companies try to rein in costs to ride out of the downturn.

The price of PayPal has been kept under a tight lid due to decades of high inflation that has hit consumers who have to deal with the threat of a recession.

Shares of the payments firm, which lost about 60% of their value last year, went up about 2% in afternoon trading.

Like other tech companies, PayPal is trying to position itself financially and strategically in order to bracing for an economic slowdown, said Moshe Katri, analyst at Wedbush.

Thomas Hayes, chairman and managing member at Great Hill Capital, told Reuters that tech over-hired during the pandemic and rationalizing staff during a soft period will help them retain margins as conditions recover. In November, PayPal cut its annual revenue growth forecast in anticipation of a broader economic downturn and said it did not expect much growth in its U.S. e-commerce business in the holiday quarter.

At the time, executives at the company said that a challenging macro environment and slowing e-commerce trends were pushing it to be prudent with its forecast.