Online used car retailer, Carvana, laid off approximately 2,500 of its workers over Zoom on Tuesday.
Tweets showed that Carvana's action incited "mass hysteria" among workers when the company sent a company-wide email at 7:30AM.
The email notified the employees of the impending job cuts, however, it did not specify who would be affected.
It was rumored that the Zoom had been pre-recorded, but Carvana said it was not the case. The laid off employees are mostly in "operation positions" comprising 12% of the companies' workforce.
Carvana Says It Held as Many Conversations in Person as Possible
Carvana said that "less than half" of the layoffs were conducted over Zoom and that the company "had as many conversations as we could in person," the company's spokesperson told Protocol.
However, the spokesperson did not say a word as to how many of the layoffs were conducted over Zoom and how many were in person. But the company initially did not dispute that 2,500 employees were laid off via Zoom.
Carvana isn't the first company to poorly choose a Zoom webinar to conduct layoffs. Mortgage startup Better.com fired about 10% of its workforce in a webinar late last year.
Better.com was heavily criticized online for the ill-advised choice. It looks like Carvana is bound to have the same fate.
On the same day it told employees of the layoffs, Carvana announced it would spend $2.2 billion to buy the Adesa business of car auction sites from KAR Auction Services.
The Wall Street Journal reported that while CEO Ernie Garcia expects the purchase to help "catapult" Carvana back to growth, the company faced some challenges financing the deal.
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Carvana Offers 4 Weeks of Pay to "Impacted Team Members"
According to TechCrunch, per the same filing, the company will offer "impacted team members" the "opportunity to receive four weeks of pay plus an additional week for every year they have been with Carvana." Along with it, affected employees will have "the opportunity to receive extended healthcare."
According to an 8-K form the company filed with the Securities and Exchange Commission, Carvana's executives are forgoing their salaries for the remainder of the year to help pay the laid-off employees' severance.
It is not a surprise that the company is cutting staff given its recent financial performance because despite finding success early in the pandemic, Carvana has struggled recently, as per Engadget.
The company reported a $260 million net loss during its first-quarter earnings call.
The CEO blamed the layoffs on the financial headwinds that have come its way. Its stock price is down more than 84% since the start of the year, according to Protocol.
A Carvana spokesperson told Protocol: "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."
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