(Bloomberg) – Carvana Co. said it would cut about 1,500 jobs, adding to the growing list of layoffs at corporate America as the online vehicle dealership grapples with a slowing car market. ‘opportunity.
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The job cuts amount to about 8% of the company’s workforce, a spokesperson confirmed on Friday.
Chief executive Ernest Garcia told staff the layoffs were part of a broader cost-cutting effort, according to a person familiar with the matter who asked not to be identified. The cuts, along with moves to eliminate some sites and end some shifts, are due to the tough economic environment, the person said.
The job cuts will impact business, operations and technology roles, the person said. Affected employees will receive severance and severance pay until at least January 1, as well as three months of medical coverage. They will also receive unvested equity awards as cash payments, depending on the person.
The move marks the latest setback for Carvana, which is struggling with cash outflows and a falling share price. The Tempe, Arizona-based company, which operates an online platform selling used cars, benefited last year when supply issues in new car production caused a surge in demand for used vehicles. But a recent market reversal, marked by falling used vehicle prices and rising interest rates, has hurt consumer demand.
Read more: Carvana shares plunge to record low as used car values fade
The shares fell 6.1% to $7.81 at 1:14 p.m. in New York. Carvana has plunged 96% this year through Thursday’s close.
Used vehicle prices fell in October for the fifth straight month, according to the closely watched Mannheim Used Vehicle Value Index. The change has significantly dampened Carvana’s business and has Wall Street analysts worried, with Morgan Stanley’s Adam Jonas recently saying the stock could be worth as little as $1.
Carvana this month cited a weaker used-car market and the broader economy when its quarterly earnings missed analysts’ estimates.
The company is the latest in a string of companies across industries to cut its ranks as conditions deteriorate, FedEx Corp. having said earlier this week that it would lay off some workers. Most of the biggest job losses have been in the tech industry.
CNBC earlier announced the layoff plans.
(Updates with details on cost reductions in third paragraph)
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