PayPal Co-Founder & Affirm CEO Max Levchin. Photo by John Lamparski/Getty Images
Buy-now, pay-later giant Affirm announced on Wednesday afternoon that it is cutting 19% of its workforce — about 500 people — alongside earnings results that missed analyst expectations.
Context: The reduction will reset the company to the size it was "between 6 and 12 months ago," CEO Max Levchin wrote in a note to employees.
- "The root cause of where we are today is that I acted too slowly [as] macroeconomic changes unfolded," he said, citing a "mid-2022" shift as the Fed increased rates.
- Levchin's stated mistake also comes as Affirm had already trimmed about 1% of its staff toward the end of last year.
The big picture: E-commerce business leaders have talked often about the "pull-forward effect" the pandemic has had on their industry.
- That is, demand they would have seen in future years arrived all at once during lockdowns and stay-at-home periods.
- When payment platform Stripe announced a 14% cut to its staff last fall, CEO Patrick Collison said they were “much too optimistic” about how quickly internet businesses would grow in the near term, expecting that pull-forward demand to continue.
What to watch: Shares of Affirm plunged as much as 21% after hours on Wednesday.
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