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U.S. tech companies yank job offers, leaving college grads scrambling

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© Reuters. FILE PHOTO: A woman throws her graduation mortar board cap in the air as she poses for her photographer in front of the Lincoln Memorial in Washington, D.C., U.S. April 30, 2019. REUTERS/Clodagh Kilcoyne/File Photo

By Sheila Dang

(Reuters) – One by one, over the last week of May, Twitter Inc (NYSE:TWTR) rang up some members of its incoming class of new hires who had recently graduated from college and revoked the job offers in 15-minute calls, according to some of the recipients.

“It was traumatic,” Iris Guo, an incoming associate product manager living in Toronto, told Reuters. She received the bad news in a 10:45 p.m. video call that her position had been eliminated. Since then, she has raced to find new employment in order to secure her U.S. work visa.

More than 21,500 tech workers in the United States have lost their jobs so far this year, according to Layoffs.fyi, a website that monitors job cuts. The number of tech layoffs in May alone skyrocketed 780% over the first four months of the year combined, according to outplacement services firm Challenger, Gray & Christmas.

But recent college graduates like Guo, who graduated from the University of Waterloo and studied financial management and computer science, represent a new dimension to the cutbacks as their nascent careers are eliminated even before they begin. The trend reflects a new austerity sweeping across some parts of the tech industry such as crypto and venture capital-backed companies.

For crypto firms, the belt-tightening is due to the recent crash in cryptocurrency prices and venture capital-backed companies are also cutting costs to avoid going back to the market for additional funding, said Kyle Stanford, senior analyst for venture capital at Pitchbook.

Crypto firm Coinbase (NASDAQ:COIN) Global Inc laid off 18% of staff this month, payments firms Klarna and Bolt Financial collectively laid off over 900 people while major names like Meta Platforms Inc, Lyft Inc (NASDAQ:LYFT) and Uber Technologies (NYSE:UBER) Inc have said they will slow or freeze hiring.

In what appears to be a counter trend to the Great Resignation of 2022, when legions quit for new jobs, some tech job-seekers now face cost cuts and hiring freezes amid four-decade-high inflation, a war raging in Ukraine and the ongoing pandemic.

In the case of those who were poised to join Twitter, the whims of billionaire Elon Musk have also caused stress. Musk has agreed to buy Twitter for $44 billion, but his recent tweets have raised questions about when and if the acquisition will be completed.

To be sure, hiring in the tech sector as a whole has remained strong, according to experts from staffing and consulting firms. Tech roles in the healthcare and finance industries are strong, as well as in the information technology field, said Thomas Vick, a Texas-based regional director for staffing firm Robert Half’s tech practice.

But for the incoming class of new hires out of college, losing their job offers now is especially damaging as they said they are locked out of companies like Meta Platforms, Alphabet (NASDAQ:GOOGL) Inc’s Google and other tech giants, which have already secured their new cohort of recruits.

Lucas Durrant, an electrical engineering graduate from Canada, was set to start his new job as a software engineer at Bolt last week. While on vacation a few weeks ago, he received an email stating that his offer was rescinded. Bolt announced it would begin layoffs in late May, citing economic conditions.

“It feels a bit like a race against the clock before we see a bigger economic downturn,” said Durrant. “Pretty soon, I’m also going to be competing against people graduating in 2023.”

LIMITED OPTIONS

At least 40 recent college graduates have lost job offers in the past few weeks, according to LinkedIn posts and Google spreadsheets that circulated online to help those affected find new positions.

As of Tuesday, 22 recent grads were listed on a spreadsheet as having offers rescinded from Twitter and nine people were listed on a separate spreadsheet for Coinbase.

In a statement, Twitter said it acknowledged that the rescinded offers could put candidates in a difficult position, and said it is offering compensation to those affected.

Coinbase pointed to a June 2 blog post that said the decision to rescind a number of offers was not made lightly, but was “necessary to ensure we are only growing in the highest-priority areas.”

Chloe Ho, a recent graduate from the University of California, Davis, and who is originally from Hong Kong, has until Sept. 29 to find a new job, or be forced to leave the United States. Ho had accepted a position as a content marketing specialist for an online grocery company called Weee! before the position was rescinded.

As a non-U.S. citizen who needs a new employer to sponsor her work visa, “my options are very limited,” she said.

Ho said she canceled a lease for a new apartment in the San Francisco Bay area, pulled out of vacation plans with friends and will now spend the next three months networking for a new job during the day and submitting applications at night. “I had planned everything around this job,” she said.

Many affected graduates took to LinkedIn to express their disappointment, detail how the rescinded offers upended plans for cross-country moves and ask for referrals to new companies.

Graduates who spoke with Reuters said they were surprised by the level of outreach from people offering to help. Still, the sting of losing their dream jobs has lingered.

One recent college graduate who was set to join Coinbase, and did not want to be named due to his ongoing job hunt, said that just a week before losing his job offer, he had received an email from Coinbase with reassurance that the company did not plan to walk back existing offers.

“I was disappointed for a few reasons. I didn’t think leadership would make that decision,” he said.

While the companies may be saving some money in the short term, they are risking “potentially catastrophic” reputational damage, said Brian Kropp, distinguished vice president of Gartner (NYSE:IT)’s human resources practice.

“Just think about how unfair that is to people you’re rescinding the offer from,” he said. “You’re putting them in a painful situation.”

Stock Markets

Easing chip shortages to help Volkswagen in H2 – CEO

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© Reuters. FILE PHOTO: Volkswagen logo is pictured at the 2022 New York International Auto Show, in Manhattan, New York City, U.S., April 13, 2022. REUTERS/Brendan McDermid/File Photo

BERLIN (Reuters) – Volkswagen (ETR:VOWG_p) sees a strong second half of 2022 and expects progress in catching up with rival Tesla (NASDAQ:TSLA) as easing chip shortages start to offset supply chain bottlenecks and rising costs, the carmaker’s CEO said on Tuesday.

“We are earning more than ever,” Chief Executive Herbert Diess said at a works meeting, adding Volkswagen is ramping up electric vehicle volumes in its biggest markets in Germany and China thanks to easing semiconductor shortages.

This should allow the carmaker to narrow the Volkswagen-Tesla gap this year and meet its goal of becoming market leader by 2025 if it seizes the moment while the U.S. electric car maker burns cash on large investments, the CEO said.

“Elon (Musk) has to ramp up two highly complex factories in Austin and Gruenheide at the same time – as well as expand production in Shanghai. That’s going to take strength out of him,” Diess said.

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Reliance Chairman Mukesh Ambani steps down as director of telecom arm

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© Reuters. FILE PHOTO: Mukesh Ambani, Chairman and Managing Director of Reliance Industries, arrives to address the company’s annual general meeting in Mumbai, India July 5, 2018. REUTERS/Francis Mascarenhas

BENGALURU (Reuters) – Reliance Industries Chairman Mukesh Ambani has stepped down as director of Reliance Jio Infocomm Ltd, the conglomerate’s telecom arm said on Tuesday.

Reliance Jio said https://refini.tv/3Nrs773 it has appointed Mukesh’s son and non-executive director Akash Ambani as the chairman of its board. Akash has been involved with the telecom unit since its launch in late 2016, where he started as a director.

India’s telecoms sector had been upended after the entry of Jio, which triggered a price war that forced some rivals out of the market and turned profits into losses.

Jio, which started out offering mobile teleservices, has been aggressively investing in services like internet broadband and forging ties with handset makers to launch low-cost smartphones and providing 5G services.

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UBS Downgrades Ebay, Farfetch to Neutral on Guidance Risks

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© Reuters. UBS Downgrades Ebay (EBAY), Farfetch (FTCH) to Neutral on Guidance Risks

By Senad Karaahmetovic

UBS analyst Kunal Madhukar downgraded shares of Farfetch (NYSE:FTCH) and eBay (NASDAQ:EBAY) to Neutral from Buy.

EBAY shares are cut alongside the price target (to $48.00 from $60.00 per share) despite low expectations. Still, the analyst expects 2022 GMV to fall by 17%, which is worse than the guidance of 16%-14% and the Street’s consensus of 15%.

“We think the buy side may already be lower than the Street. YTD, the stock has been one of the better performers within the eCommerce space, benefiting from both a ~2% dividend yield and aggressive share repurchases. However, when the market rebounds, we think EBAY shares could lag smaller cap peers (which are likely to grow much faster in a recovery) until investors have better visibility into organic growth at eBay. Consequently, we think the shares likely will remain range-bound until visibility improves,” Madhukar told clients in a note.

The price target on Farfetch shares goes to $10.00 from the prior $13.00 as Madhukar sees too optimistic assumptions for growth from the side of the company’s management.

“In addition to slower growth, we think upside is limited by lack of visibility into key drivers of value, including FPS volumes and economics, as well as on China. Granted, the YNAP deal could be a positive catalyst (link), but if the disclosure is limited (like with the recent deal with Neiman Marcus Group or NMG), it may be challenging for investors to understand if it creates shareholder value or not. Last, FTCH remains a profitless-tech company in an environment where investors are acutely focused on profits, and thus, there is limited valuation support,” the analyst added.

Similar to eBay, Madhukar sees shares remaining “range-bound until we have better visibility into growth and/or the path to profitability.”

Shares of eBay and Farfetch are down 2.4% and 2.2%, respectively, in pre-market Tuesday.

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