Carvana announced it will be laying off 2,500 employees, a full 12% of the company’s workforce. Many of the employees learned they were being laid off during a Zoom meeting Tuesday.
An internal email obtained by ABC15 from Carvana CEO Earnie Garcia blamed the layoffs on “all time high car prices slowing sales to recession levels.” Garcia says that the layoffs “will be concentrated in our operational positions.”
Laid off employees were given a one-month severance package that would expand by one week for every year of service as well as three months of healthcare.
Documents filed with the SEC by Carvana state that company executives would be foregoing salaries for the remainder of the year to help pay for severance packages.
One woman ABC 15 spoke with had two children employed by Carvana. One was let go today. She says that Carvana was a great company to work for, even helping one of her kids raise money for medical bills on GoFundMe, but she expected more from them.
“It’s a mix of emotions,” she said. “I understand that a company falls on hard times, but I think that they grew too fast.”
Revenue for Carvana has exploded since its initial public offering in August 2017. Going from 858 million to 12.8 billion in 2021, a 14-fold increase.
Economist Jim rounds said that one of Carvana’s major problem is the business model that made them successful is no longer innovative. “Now there’s lots of other groups that have the same way of doing business, even the old car dealers. You can go and buy your car almost sight unseen,” Rounds said.
Carvana’s stock was a darling of the pandemic era market. Reaching a peak of almost $350 a share in August of 2021. The stock closed today just below $39, an almost 90% drop.
ABC 15 reached out to Carvana for comment and received this statement from a spokesperson:
“Recent macroeconomic factors have pushed automotive retail into recession. While Carvana is still growing, our growth is slower than what we originally prepared for in 2022, and we made the difficult decision to reduce the size of certain operations teams to better align with the current needs of the business.
Saying goodbye to any team member is not a decision we take lightly and we aim to be transparent, thoughtful and supportive throughout this process, including providing meaningful assistance, resources and support to impacted team members. We believe these decisions, while extremely difficult, will result in Carvana restoring a better balance to our operations and facilitate the company returning to efficient growth on its mission to change the way people buy and sell cars.”