Carvana job cuts trigger market sell-off, staff backlash – Jahanagahi

Carvana job cuts trigger market sell-off, staff backlash

Carvana Co.’s disclosure Tuesday that it shed 2,500 employees set off a ripple of reactions in the stock market and among social media users who said they were employees included in the layoffs.

On Twitter and Reddit, several people who said they worked at Carvana wrote that they received little or no heads-up from the company that they would be let go Tuesday. Some posted screenshots of an apparent companywide email Carvana CEO Ernie Garcia III sent early Tuesday morning, before official layoffs occurred later in the day.

The email, which Carvana did not confirm or deny to Automotive Newssaid the layoffs come as the company is grappling with financial fallout from high inflation and interest rates, dwindling consumer and investor confidence and supply chain disruption.

“The impact of all of these forces on our industry has been severe,” Garcia said in the email. “All-time-high car prices are slowing sales to recession levels. We have managed to grow despite sales being down industry wide, but we have grown a lot less than we planned for.”

The Wall Street Journal reported the email as genuine.

As a result of all those factors, Carvana finds itself out of balance, the email said.

“Our team is bigger than we need and we can’t be certain growth will rebound quickly enough to bring us back into balance,” it said.

Some social media users voiced their frustrations.

“I doubt Ernie 3 will lose sleep over it,” @ocelot11teas wrote in a lengthy Twitter thread. “To him, we are merely 2,500 replaceable numbers in his little vending machine castle of car money.”

Others posted that they were now searching for a new job. Some took to offering up career resources, job postings and mental health advice to affected employees. On LinkedIn, former Carvana employees circulated a document to which other laid-off employees could add their information in the hopes potential new employers will see it.

Market reaction

News of the layoffs dealt another blow to Carvana’s stock performance, which has been on a downward spiral over the last several months.

Carvana’s stock price fell below $40 early in the week. It sank to $30 at the Wednesday market close before recovering a little Thursday morning.

In August, the company’s stock price rose above $370, a high point amid a pandemic-fueled frenzy for vehicles that could be purchased online. But customer demand has failed since then.

Carvana chose to cut costs by laying off employees because it knows that waning demand could stick around, according to analysts.

Garcia’s losses

Bloomberg estimated that Garcia and his father — Ernie Garcia II, a major shareholder in Carvana — had in August a combined personal wealth of $32 billion, when business was booming and Carvana’s stock price hit that $370 mark.

But in the months since, the Garcias have lost almost 80 percent of that wealth, according to Bloomberg.

In January, the younger Garcia said he would give employees 23 shares of his personal stock once they reached their two-year employment anniversary. The gesture, Carvana said, was to recognize and reward employees because the company sold its 1 millionth vehicle.

Twenty-three shares were valued at more than $5,000 the day the gift was announced — when Carvana’s opening stock price was still above $200.

Laid-off employees who had reached the two-year milestone will still get those shares — now worth less than $1,000 — according to the email.

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