Carvana to lay off 1,500 employees following stock freefall

Carvana plans to lay off about 1,500 people, or 8% of its workforce, following a freefall in the company’s stock this year and concerns around its long-term trajectory, according to an internal message obtained by CNBC’s Scott Wapner.

The email from Carvana CEO Ernie Garcia cites economic headwinds including higher financing costs and delayed car purchasing. He says the company “failed to accurately predict how this would all play out and the impact it would have on our business.”

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The lay offs add to a growing number of tech-focused job cuts amid rising interest rates, inflation and fears of an economic downturn. For Carvana, it also follows rapid growth but some missteps during the coronavirus pandemic to better capitalize on an unprecedently strong used-vehicle market during the coronavirus pandemic.

“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,” Garcia wrote.

Shares of the company were down 7% by midday trading Friday. A spokeswoman for Carvana confirmed the authenticity of the letter but declined further comment.

The layoffs mainly impact employees in Carvana’s corporate and tech departments, according to the letter. Garcia said all employees in those units would receive emails with information about whether they are impacted by the cuts or not.

“To those impacted, I am sorry,” 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.”

This is developing news. Check back for additional updates.