Thursday's Headlines: Salesforce to Cut 10% of Staff

Thursday's Headlines: Salesforce to Cut 10% of Staff

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Baozun (BZUN) +16.7%

Farfetch (FTCH) +12.2%

Redfin (RDFN) +10.7%

RH (RH) +9.3%

Peloton Interactive (PTON) +8.9%

Moving Down ⬇️

Arista Networks (ANET) -5.8%

Microsoft (MSFT) -4.4%

Datadog (DDOG) -4.3%

Snowflake Inc. (SNOW) -3.7%

PagerDuty (PD) -2.8%
 

Salesforce to Cut 10% of Staff 😰

Salesforce announced on Wednesday it plans to lay off 10% of its personnel and reduce some of its office space as part of a broad restructuring plan. The move will impact more than 7,000 employees and will likely reshape the look of San Francisco, as Salesforce is the city’s largest employer.

In a letter to employees, co-CEO Marc Benioff said customers have been more “measured” in their purchasing decisions due to the macroeconomic environment forcing Salesforce to make the “very difficult decision”. Like many CEOs before him, Benioff admitted that the revenue acceleration the company saw during the pandemic led it to hire too many people.

The move would appear to be the latest in management’s plan to bolster the business’ adjusted operating margin. In November, Salesforce laid off 1,000 employees after officials called for an improved operating margin of 25% by 2026 compared to its current 22.7%. Analysts at Piper Sandler believe this month’s cuts could save Salesforce upwards of $1.5 billion a year. Salesforce expects to complete its full restructuring plan by 2026 to meet internal goals.

Salesforce hasn’t been short of shake-ups lately. At the end of the month, co-CEO Bret Taylor will step down while Slack CEO Stewart Butterfield walked away in November.

Salesforce was down 3% on the latest news.
 

Amazon to Cut Over 18,000 Jobs 😱

Amazon is set to lay off over 18,000 workers — more than had originally been anticipated last year.

Last November, the company announced it would be making serious cost-cutting measures after scaling up too fast during the pandemic. The company said it would be abandoning its physical bookstores, shutting unprofitable business units, and reducing its headcount in several areas.

Amazon is the largest employer in the United States, with over 1.54 million employees worldwide. The planned layoffs will represent the highest reduction of staff at a major tech company in the last year, which has been badly hit by economic uncertainty. Cuts are believed to be focused on the company’s corporate staff.

Facebook parent Meta Platforms said it would cut more than 11,000 workers late last year, while Lyft, Coinbase, and Stripe have also made significant cuts.

CEO Andy Jassy made the announcement after the plans were leaked to The Wall Street Journal. “Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so,” Jassy wrote in a memo to employees.

“These changes will help us pursue our long-term opportunities with a stronger cost structure; however, I’m also optimistic that we’ll be inventive, resourceful, and scrappy in this time when we’re not hiring expansively and eliminating some roles.”
 

Coinbase Jumps Despite $100 Million Penalty 💸

Coinbase, one of the world’s largest cryptocurrency exchanges, settled a case yesterday with New York’s state financial regulator for a grand total of $100 million. This payment is in relation to compliance issues around the firm’s anti-money laundering and customer vetting standards. Surprisingly, Coinbase’s stock actually rallied by more than 12% following the news of this settlement, with shareholders likely hoping that this spells the end of a lengthy regulatory probe.

Regarding the settlement itself, the payment is set to be split down the middle. According to Coinbase’s Chief Legal Officer, Paul Grewal:

“This agreement includes a $50 million penalty and a separate commitment from Coinbase to invest $50 million in our compliance program over two years.”

The crypto exchange came under extreme scrutiny following the collapse of fellow exchange FTX in November. Coinbase, currently the only publicly traded crypto exchange operating in the U.S., was always likely to bear the brunt of this heightened regulatory skepticism. One of the largest disparagements leveled against the crypto space is the seemingly widespread lack of regulation — with the results of investigations such as this only furthering the stack of evidence against the industry.

However, Coinbase CEO Brian Armstrong was quick to denounce such an idea, stating that “many — if not most — companies have been working with policymakers for years.” Armstrong is certainly amongst a group of crypto leaders pushing for further regulations within the space, but compliance issues continue to be unearthed.

Coinbase suffered a poor 2022 by any standard, with its stock down close to 84% in the past year despite yesterday’s slight rally.