“It’s a hard day,” read the email subject line to Shelly Little from her bosses at Carvana, an online used car retailer.
The note signalled Little was one of almost 2,500 staff laid off from the US-based company this week, in a mood described by another employee as “mass hysteria”. Since the start of the year, stock in the company famed for its towering multistorey car “vending machines” has fallen 84 per cent.
“As the ramifications of that kicks in all I can think is — wow,” Little wrote on LinkedIn, informing her friends and coworkers that she was one of the 12 per cent at Carvana being shown the door.
Her experience reflects the sudden sobriety that has descended over the US technology sector, prompted by a deep and broad stock sell-off as investors fret over rising interest rates and slowing economic growth.
Privately held companies are being forced to readjust expectations on valuations, access to funding and appetite for risk-taking among venture capitalists that may no longer throw caution to the wind.
“I think it’s certainly humbling for a lot of people in technology who thought things would never go another way, or didn’t plan for a rainy day, or were being a little bombastic,” said Semil Shah, a founder and general partner at San Francisco-based venture capital firm Haystack.
“If you were really counting your chickens before they hatched, or you were thinking about all the riches that would come your way, it’s going to take a while.”
In the public markets, Carvana has been one of the worst hit, but it is by no means alone. DoorDash, the US market leader for restaurant food delivery, is down 49 per cent year to date. Affirm, one of the biggest in the previously highly-fancied buy-now-pay-later sector, has crashed 75 per cent. Shopify, the ecommerce operator regularly billed as the most serious threat to Amazon’s ecommerce dominance, is down 67 per cent. The picture had been even bleaker until an uptick across the board…
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