Online payments giant Stripe is laying off roughly 14% of its staff, CEO Patrick Collison wrote in a memo to staff Thursday.
In the memo, Collison said the cuts were necessary amid rising inflation, fears of a looming recession, higher interest rates, energy shocks, tighter investment budgets and sparser startup funding. Taken together, these factors signal “that 2022 represents the beginning of a different economic climate,” he said.
Collison acknowledged that the company’s leadership made “two very consequential mistakes” by misjudging how much the internet economy would grow in 2022 and 2023, and when it grew operating costs too quickly.
Technology companies have been announcing layoffs and hiring freezes while moving to cut costs amid a worsening economic outlook. Amazon, Google parent Alphabet and Facebook owner Meta have all taken steps to rein in expenses. Companies including Netflix, Spotify, Coinbase and Shopify have announced layoffs.
San Francisco-based Stripe became the most valuable U.S. startup last year, with a valuation of $95 billion, though it reportedly lowered its internal valuation in July to $74 billion amid economic uncertainty and a prolonged tech rout, according to The Wall Street Journal. It processes billions of dollars in transactions each year from the likes of Amazon, Salesforce and Google, and it competes with Square and PayPal.
Stripe said its headcount will be reduced to about 7,000 employees, which means the layoffs impact roughly 1,100 people. A Stripe spokesperson was not immediately available to provide the exact number of impacted employees.
The cuts will affect many of Stripe’s divisions, though most will occur in recruiting, as the company plans to hire fewer people next year, Collison said in the memo.
In addition to laying off staff, Stripe intends to rein in costs across the company, Collison said.
Earlier today, Stripe CEO Patrick Collison sent the following note to Stripe employees.
Hi folks —
Today we’re announcing the hardest change we have had to make at Stripe to date. We’re reducing the size of our team by around 14% and saying goodbye to many talented Stripes in the process. If you are among those impacted, you will receive a notification email within the next 15 minutes. For those of you leaving: we’re very sorry to be taking this step and John and I are fully responsible for the decisions leading up to it.
We’ll set out more detail later in this email. But first, we want to share some broader context.
The world around us
At the outset of the pandemic in 2020, the world rotated overnight towards e-commerce. We witnessed significantly higher growth rates over the course of 2020 and 2021 compared to what we had seen previously. As an organization, we transitioned into a new operating mode and both our revenue and payment volume have since grown more than 3x.
The world is now shifting again. We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser startup funding. (Tech company earnings last week provided lots of examples of changing circumstances.) On Tuesday, a former Treasury Secretary said that the US faces “as complex a set of macroeconomic challenges as at any time in 75 years”, and many parts of the developed world appear to be headed for recession. We think that 2022 represents the beginning of a different economic climate.
Our business is fundamentally well-positioned to weather harsh circumstances. We provide an important foundation to our customers and Stripe is not a discretionary service that customers turn off if budget is squeezed. However, we do need to match the pace of our investments with the realities around us. Doing right by our users and our shareholders (including you) means embracing reality as it is.
Today, that means building differently for leaner times. We have always taken pride in being a capital efficient business and we think this attribute is important to preserve. To adapt ourselves appropriately for the world we’re headed into, we need to reduce our costs.
How we’re handling departures
Around 14% of people at Stripe will be leaving the company. We, the founders, made this decision. We overhired for the world we’re in (more on that below), and it pains us to be unable to deliver the experience that we hoped that those impacted would have at Stripe.
There’s no good way to do a layoff, but we’re going to do our best to treat everyone leaving as respectfully as possible and to do whatever we can to help. Some of the core details include:
Severance pay. We will pay 14 weeks of severance for all departing employees, and more for those with longer tenure. That is, those departing will be paid until at least February 21st 2023.
Bonus. We will pay our 2022 annual bonus for all departing employees, regardless of their departure date. (It will be prorated for people hired in 2022.)
PTO. We’ll pay for all unused PTO time (including in regions where that’s not legally required).
Healthcare. We’ll pay the cash equivalent of 6 months of existing healthcare premiums or healthcare continuation.
RSU vesting. We’ll accelerate everyone who has already reached their one-year vesting cliff to the February 2023 vesting date (or longer, depending on departure date). For those who haven’t reached their vesting cliffs, we’ll waive the cliff.
Career support. We’ll cover career support, and do our best to connect departing employees with other companies. We’re also creating a new tier of extra large Stripe discounts for anyone who decides to start a new business now or in the future.
Immigration support. We know that this situation is particularly tough if you’re a visa holder. We have extensive dedicated support lined up for those of you here on visas (you’ll receive an email setting up a consultation within a few hours), and we’ll be supporting transitions to non-employment visas wherever we can.
Most importantly, while this is definitely not the separation we would have wanted or imagined when we were making hiring decisions, we want everyone that is leaving to know that we care about you as former colleagues and appreciate everything you’ve done for Stripe. In our minds, you are valued alumni. (In service of that, we’re creating alumni.stripe.com email addresses for everyone departing, and we’re going to roll this out to all former employees in the months ahead.)
We are going to set up a live, 1-1 conversation between each departing employee and a Stripe manager over the course of the next day. If you are in an impacted group, look out for a calendar invitation.
For those not affected, there’ll be some bumpiness over the next few days as we navigate a lot of change at once. We ask that you help us do right by Stripe’s users and the departing Stripes.
Our message to other employers is that there are many truly terrific colleagues departing who can and will do great things elsewhere. Talented people come to Stripe because they’re attracted to hard infrastructure problems and complex challenges. Today doesn’t change that, and they would be fantastic additions at almost any other company.
Going forward
In making these changes, you might reasonably wonder whether Stripe’s leadership made some errors of judgment. We’d go further than that. In our view, we made two very consequential mistakes, and we want to highlight them here since they’re important:
We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown.
We grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in.
We are going to correct these mistakes. So, in addition to the headcount changes described above (which will return us to our February headcount of almost 7,000 people), we are firmly reining in all other sources of cost. The world is hard to predict right now, but we expect that these changes will set us up for robust cash flow generation in the quarters ahead.
We are not applying these headcount changes evenly across the organization. For example, our Recruiting organization will be disproportionately affected since we’ll hire fewer people next year. If you want to see how your organization is impacted, Home will be up-to-date by 7am PT.
We’ll describe what this means for our company strategy soon. Nothing in it is going to radically change, but we’re going to make some important edits that make sense for the world that we’re headed into, and tighten up our prioritization substantially. Expect to hear more on this over the next week.
While the changes today are painful, we feel very good about the prospects for innovative businesses and about Stripe’s position in the internet economy. The data we see is consistent with this encouraging picture: we signed a remarkable 75% more new customers in Q3 2022 than Q3 2021, our competitive win rates are getting even better, our growth rates remain very strong, and on Tuesday we set a new record for total daily transaction volume processed. Our smaller users (many of whom are just “big customers that aren’t yet big”) are, in aggregate, growing extremely quickly, showing that plenty of technology S curves remain in the early innings and that our customers remain impressively resilient in the face of the broader global challenges.
People join Stripe because they want to grow the internet economy and boost entrepreneurship around the world. Times of economic stress make it even more important that we find innovative ways to help our users grow and adapt their businesses. Today is a sad day for everyone as we say goodbye to a number of talented colleagues. But we’re ready for a pitched effort ahead, and we’re putting Stripe on the right footing to face it.
For the rest of this week, we’ll focus on helping the people who are leaving Stripe. Next week we’ll reset, recalibrate, and move forward.
Patrick and John
This news is developing. Please check back for updates.
(L-R) Apple CEO Tim Cook, Vivek Ramaswamy and Secretary of Homeland Security Kristi Noem attend the inauguration ceremony before Donald Trump is sworn in as the 47th U.S. President in the U.S. Capitol Rotunda in Washington, D.C., on Jan. 20, 2025.
Saul Loeb | Afp | Getty Images
While the stock market broadly fared better on Monday than in the prior two trading days, Apple got hammered once again, losing 3.7%, as concerns mounted that the company will take a major hit from President Donald Trump’s tariffs.
The sell-off brings Apple’s three-day rout to 19%, a downdraft that has wiped out $638 billion in market cap.
Apple is one of the most exposed companies to a trade war, analyst say, due largely to its reliance on China, which is facing 54% tariffs. Although Apple has production in India, Vietnam and Thailand, those countries also face increased tariffs as part of Trump’s sweeping plan.
Among tech’s megacap companies, Apple is having the roughest stretch. On Monday, the only stocks to drop in that group of seven were Apple, Microsoft and Tesla.
The Nasdaq finished almost barely up on Monday after plummeting 10% last week, its worst performance in more than five years.
Analysts say Apple will likely either need to raise prices or eat additional tariff costs when the new duties come into effect. UBS analysts estimated on Monday that Apple’s highest-end iPhone could rise in price by about $350, or around 30%, from its current price of $1,199.
Barclays analyst Tim Long wrote that he expects Apple to raise prices, or the company could suffer as much as a 15% cut to earnings per share. Apple may also be able to rearrange its supply chain so that imports to the U.S. come from other countries with lower tariffs.
A customer checks Apple’s latest iPhone 16 Plus (right) and Apple’s latest iPhone 16 Pro Max (left) series displayed for sale at Master Arts Shop in Srinagar, Jammu and Kashmir, on Sept. 26, 2024.
Firdous Nazir | Nurphoto | Getty Images
President Donald Trump’s reciprocal tariffs could lead Apple to raise the price of the iPhone 16 Pro Max by as much as $350 in the U.S., UBS analysts estimated Monday.
The iPhone 16 Pro Max is Apple’s highest-end iPhone on the market, and currently retails for $1,199. UBS is predicting a nearly 30% increase in retail price for units that were manufactured in China.
Apple’s $999 phone, the iPhone 16 Pro, could see a smaller $120 price increase, if the company has it manufactured in India, the UBS analysts wrote.
Shares of Apple have plummeted 20% over the past three trading days, wiping out nearly $640 billion in market cap, on concern that Trump’s tariffs will force the company to raise prices just as consumers are losing buying power.
“Based on the checks we have done at a company level, there is a lot of uncertainty about how the increased cost sharing will be done with suppliers, the extent to which costs can be passed on to end-customers, and the duration of tariffs,” UBS analyst Sundeep Gantori wrote in the note.
Apple, which does the majority of its manufacturing in China, is one of the most exposed companies to a trade war. China has a potential incoming 54% tariff rate — before new increases were proposed Monday. Smaller tariffs were also placed on secondary production locations, such as India, Vietnam and Thailand.
JPMorgan Chase analysts predicted last week that Apple could raise its prices 6% across the world to offset the U.S. tariffs. Barclays analyst Tim Long wrote that he expects Apple to raise prices, or it could suffer as much as a 15% cut to earnings per share.
If Apple were to relocate iPhone production to the U.S. — a move that most supply chain experts say is impossible — Wedbush’s Dan Ives predicts an iPhone could cost $3,500.
Morgan Stanley analysts on Friday said Apple could absorb additional tariff costs of about $34 billion annually. They wrote that although Apple has diversified its production in recent years to additional countries — so-called friendshoring — those countries could also end up with tariffs, reducing Apple’s flexibility.
After last week’s “reciprocal tariff announcement, there becomes very little differentiation in friend shoring vs. manufacturing in China — if the product is not made in the US, it will be subject to a hefty import tariff,” Morgan Stanley wrote.
Last week, the firm estimated that Apple may raise its prices across its product lines in the U.S. by 17% to 18%. Apple could also get exemptions from the U.S. government for its products.
Kimbal Musk, co-founder of The Kitchen Community, speaks during the annual Milken Institute Global Conference in Beverly Hills, California, May 3, 2016.
Patrick T. Fallon | Bloomberg | Getty Images
Elon Musk’s younger brother, Kimbal, took to the social network X on Monday to lambaste President Donald Trump’s tariffs, calling them a “structural, permanent tax on the American consumer.” He also said Trump appears to be the “most high tax American President in generations.”
“Even if he is successful in bringing jobs on shore through the tariff tax, prices will remain high and the tax on consumption will remain the form of higher prices because we are simply not as good at making things,” Kimbal Musk wrote on X, one of the companies in his brother’s extensive portfolio.
The younger Musk owns a restaurant chain called The Kitchen, is a board member at Tesla and a former director at SpaceX and Chipotle. He has also co-founded and invested in other food and tech startups, including Square Roots, an indoor farming company, and Nova Sky Stories, a creator of drone light shows that he bought from Intel.
Elon Musk is a top advisor to Trump, overseeing the so-called Department of Government Efficiency, or DOGE, an effort to drastically cut federal spending, largely through layoffs, and consolidate or eliminate agencies and regulations. However, his relationship with some key figures in the Trump administration has been showing signs of strain in recent days as the president’s sweeping tariffs have led to a dramatic selloff in stocks, including for Tesla, which is down 42% this year and just wrapped up its worst quarter since 2022.
Over the weekend, Elon Musk took aim at Trump trade advisor Peter Navarro, disparaging his qualifications in a post on X.
“A PhD in Econ from Harvard is a bad thing, not a good thing,” Musk wrote, after Navarro told CNN on Saturday that “The market will find a bottom” and that the Dow will “hit 50,000 during Trump’s term.” It’s currently at about 38,200.
Musk also said that Navarro hasn’t built “sh—.” Navarro told CNBC on Monday that Musk is “not a car manufacturer” but rather a “car assembler,” dependent on parts from Japan, China and Taiwan.
Tesla was seeking a more moderate approach to trade and tariffs in a recent letter to the U.S. Trade Representative.
According to Federal Election Commission filings, Kimbal Musk this year has contributed funds to the Libertarian National Committee and Libertarian Party of Connecticut. In 2024, while his brother became the biggest financial backer and promoter of Trump, Kimbal donated to Unite America PAC, a group that markets itself as a “philanthropic venture fund that invests in nonpartisan election reform to foster a more representative and functional government.”
A representative for Kimbal Musk didn’t immediately respond to a request for comment.