Carvana will "lay off" 1,500 workers.

Carvana, an online used-car retailer, announced plans to lay off 1,500 employees, or 8% of its workforce, citing economic headwinds and higher financial costs.

The stock price of the company has dropped 97% in the last year. Carvana's business has been harmed by persistent inflation, rising interest rates, and the threat of a recession.

“Today is a difficult day. The world around us has continued to get tougher and to do what is best for the business, we have to make some painful choices to adapt”. 

Ernie Garcia, CEO of Carvana, said

Rising borrowing costs and worries about a looming recession have dampened demand for used cars, leading to falling prices

After reaching historic highs in 2021, used vehicle prices fell for the fifth consecutive month in October.

According to the Manheim Used Vehicle Value Index 

Garcia said, “As you all know, we made a similar decision to this one in May. It is fair to ask why this is happening again, and yet I am not sure I can answer it as clearly as you deserve.” 

These layoffs would be in addition to the 2,500 announced by Carvana in May. Many technology companies have struggled in the year since the pandemic's peak.

Meta Platform Inc., Facebook's parent company, laid off 13% of its employees earlier this month, while Amazon announced plans to lay off 10,000 workers this week.

According to the company, fired Carvana employees will receive separation and severance pay, extended healthcare coverage for three months, and other benefits.

Following the announcement of the layoffs, Carvana stock fell 6.2% to $7.80 on Friday. The stock has dropped 97% in the last year, far outpacing the S&P 500 Index's 17% decline.