Food delivery company DoorDash said on Wednesday it was cutting about 1,250 jobs, or 6% of its workforce, amid a slowdown in demand.
After DoorDash went on a hiring spree during the pandemic, the company today is facing a sudden drop in demand that left it grappling with ballooning costs. DoorDash has about 20,000 employees.
“We were not as rigorous as we should have been in managing our team growth… That’s on me. As a result, operating expenses grew quickly,” CEO Tony Xu said in a memo to employees. “Given how quickly we hired, our operating expenses – if left unabated – would continue to outgrow our revenue.”
The company’s shares were up about 5% in morning trade after the news broke. Shares are down near 60% this year.
The growth prospect of delivery firms as economies reopen is still far from expectations. DoorDash
joined other top tech companies that have laid off thousands of employees in recent weeks as they brace for a potential economic downturn.
DoorDash went public at the end of 2020 in a successful IPO that sent shares soaring 80% over initial pricing. In November 2021 it hit a peak valuation of $81.1 billion. Earlier this month, the company reported a bigger-than-expected quarterly net loss of $295 million