Layoff Analysis: Companies Begin Second Rounds Of Cuts As Rough Employment Summer Drags On 

While some tech companies have chosen to pause hiring or announce initial layoffs, others are gearing up for their second round of cuts.

Private companies including Gemini, Gopuff and Hopin had a second round of layoffs in July, following staff cuts earlier in the year. The layoffs are among those that have affected more than 30,000 people working for U.S.-based tech companies (or companies based elsewhere with large workforces in the U.S., like Hopin and Klarna).

While July wasn’t as active for layoffs as June (when tech layoffs peaked so far this year), the month proved to be popular for a second round, especially for late-stage companies. According to a Crunchbase News analysis, at least four companies at the Series C stage or beyond initiated layoffs this month. The company with perhaps the quickest back-to-back layoffs was Netflix, which laid off around 150 employees in May, and then around 300 employees in late June.

The moves show that companies are bracing for a recession, and more late-stage or public companies could make a second cut as uncertainty over the economy looms. Late-stage  companies in particular have been hit hard by layoffs, as they’re the ones that more likely grew fast during the funding boom of last year and have to wait out an exit as the IPO market is at a standstill.

June was the most active month for layoffs so far this year, with at least 75 reports of layoffs at U.S.-based tech companies. Part of the reason for a flurry of layoffs, especially toward the end of June, was likely the ending of the second quarter.

Layoff counts rise

So far in July, at least 65 companies have initiated layoffs, according to Crunchbase News’ tally of public reports. That number is likely higher, due to layoffs that go unreported, especially at earlier-stage tech companies. But this month has also seen large tech companies including Microsoft and Shopify (which is based in Canada but has a large number of U.S. employees) trim staff.

We didn’t really start seeing the second wave of layoffs at companies start to pick up until around June. Utah-based Homie, for example, initiated its second round of layoffs in June after going through layoffs in February.

Companies that initiated layoffs earlier in the spring or summer likely realized they didn’t cut as many employees as they should have. The past few weeks have made the economic outlook seem worse, with the Federal Reserve initiating the largest interest rate hike in nearly 40 years. And recent reports show that inflation rose more than expected in June. The combination of the two caused the stock market to dip in recent weeks, and some companies have taken a second look at their costs.

In other words, tighten your seatbelts, because this probably won’t be our last layoff update.

Illustration: Dom Guzman

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