What’s going on:
On Wednesday, Affirm laid off 485 of its 2,552 employees — a cut of 19%. This announcement was followed by the company’s second quarter earnings report, which failed to meet analyst expectations, causing shares to plummet by 17%.
In his letter to shareholders, Founder and CEO Max Levchin described the decision as the “single most difficult one” amongst all the cuts the company had to make, and said the layoffs would be taking effect immediately.
Why it matters:
Levchin claimed that the Federal Reserve’s policy shifted everything in mid-2022, stifling consumer spending and causing Affirm’s borrowing costs to skyrocket. Reflecting on this, he acknowledged, “I should have moved faster as these macroeconomic changes came to light.”
How it’ll impact the future:
Despite analysts predicting $416 million in revenue for the quarter, Affirm reported only $400 million in revenue, much to the dismay of shareholders. Levchin then went on to say that the company will be keeping its headcount “essentially flat” in the foreseeable future.