DoorDash shares are down more than 60% for the year but saw a bump on Wednesday after the company announced it was axing 1,250 corporate employees as a cost-cutting measure. CNBC reports it had 8,600 such employees at the end of last year; the AP reports the cuts represent 6% of its total workforce. Those laid off will receive 17 weeks of severance and have health insurance through March. CEO Tony Xu gave context in a message to employees, where he explained the company "was actually undersized" prior to the pandemic. The "sudden and unprecedented opportunities" that the pandemic ushered in caused DoorDash to speed "up our hiring to catch up with our growth and [start] many new businesses in response to feedback from our audiences."
"Most of our investments are paying off, and while we've always been disciplined in how we have managed our business and operational metrics, we were not as rigorous as we should have been in managing our team growth," he continued. "That's on me. As a result, operating expenses grew quickly." The AP reports DoorDash had a good Q3 revenue-wise, with revenue up 33% to $1.7 billion. Costs were another story: The company recorded $296 million in losses for the quarter, compared to $101 million in Q3 2021.
"Put in simple terms, the business is now losing around 70 cents for each order it fulfills. This is a sharp increase in the 41 cents it was losing at the start of this fiscal year," said Neil Saunders, managing director of GlobalData. "All the metrics are pointing in the wrong direction." Axios places DoorDash within the bigger picture: "Layoffs and hiring freezes have become commonplace in the tech industry this year, and it's expected to continue throughout the winter as companies warn of the troubling times ahead." (More DoorDash stories.)
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