The job market in the tech industry is starting to show some cracks.
On Tuesday, streaming giant Netflix (NFLX) confirmed it is laying off 150 workers amid slowing demand. That same day, e-commerce giant Wayfair (W) announced a 90-day hiring freeze, citing ‘macro uncertainty.’
The cost-cutting measures coincide with recent stock market declines and the start of a tighter monetary policy cycle.
“A decade of free money is coming to a halt” for companies, Matt Maley of Miller Tabak told Yahoo Finance. Given recent stock market volatility, companies are “not going to be able to go to the marketplace to raise money. If they want to take a corporate loan out, that’s going to cost them more money.”
Maley added that the “amount of cheap money out there is going to shrink.”
Talent war ‘never goes away’ for tech
Many of the companies announcing layoffs or hiring freezes saw their highest valuations during the pandemic when interest rates were near zero and the stock market was at all-time highs.
And as the pandemic subsides, startups that hired rapidly to meet growing demand are now seeing consumer habits shifting.
The popular investing app Robinhood (HOOD), connected fitness maker Peloton (PTON), and used car platform Carvana (CVNA) have all announced job cuts in the last several months. Even well-established tech giants like Meta (FB) and Twitter (TWTR) are pausing hiring.
Some layoffs shouldn’t come as a surprise, since slower growth was clearly telegraphed during the latest earnings releases. This was the case with Netflix.
“As we explained on earnings, our slowing revenue growth means we are also having to slow our cost growth as a company,” a Netflix spokesperson said in a statement.
Despite the rise in tech layoffs, there are still more job openings in the industry now compared to last year. Companies will try to protect their core workers at all costs, according to Maley.
“The war for talent, it never goes away in the tech area,” Maley said. “They’re going to say, ‘We want to make sure we have enough money to keep our very best people.'”
Ines is a markets reporter covering equities. Follow her on Twitter at @ines_ferre
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