Wealthsimple, a Toronto-based company, is laying off 13% or 159 of 1,262 employees as the financial services company faces immense “market volatility”.
In an announcement, Wealthsimple CEO Michael Katchen said that the layoffs is part of the fallout from months of seeing the market soar and its rapid growth at an “unprecedented” rate amid the COVID-19 pandemic.
“Because of changes to market conditions, we’ve made the difficult decision to reduce the size of Wealthsimple’s workforce”, CEO Michael Katchen’s message. He added “Of the 1,262 people who work for Wealthsimple today, 159 will be leaving the company”.
In addition, Kathen wrote “Of course volatility works both ways, and we’re seeing the other side of it now as the pandemic market conditions unwind,”
“Many of our clients are living through a period of market uncertainty they’ve never experienced before.”
The changing conditions mean the company will now focus more heavily on core businesses, like investing and banking, and products he believes will power financial innovation, like those within the crypto industry.
Katchen added that the company will reduce its investment in other areas like peer-to-peer payments, tax, and merchant services and restructuring teams dedicated to recruiting, marketing, client success and research.
“Today is going to be hard — there’s no getting around it,” he said, in his note. “But our mission has never been more important.”
Wealthsimple’s job cuts come as global technology companies are bracing for a market correction and possible recession as the exuberance around tech stocks is fading and some share prices have plummeted 50 per cent from their COVID-19 highs.
Coinbase, Netflix, Klarna, Cameo and Bolt are among those that have already conducted layoffs, though many others are freezing hiring.
Wealthsimple current valuation hit $5 billion and it raised $750 million from investors like Drake, Ryan Reynolds, and Michael J. Fox. It was founded by Michael Katchen in 2014 and is now primarily owned by Power Corp.