More tech layoffs are coming after Salesforce’s 10% cut

CNBC’s Jim Cramer on Wednesday warned investors that the tech industry will likely see more layoffs due to continuing macroeconomic headwinds.

“There are so many tech companies with bloated payrolls that are still trying to grow rapidly, overpaying for new employees, and they fear that layoffs will mean that their time in the sun is over,” he said, adding, “They don’t seem to understand that their time in the sun ended over a year ago.”

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His comments come after Salesforce said Wednesday that it is slashing 10% of its staff and curtailing office space. The cloud-based software firm had over 79,000 employees as of December.

Shares of Salesforce rose 3.57% on Wednesday.

The layoffs, part of a broader restructuring plan at Salesforce, are the company’s latest headcount reductions after it let go of hundreds of employees in November.

Other tech firms, including Meta Platforms, Netflix and Lyft, culled their workforces to cut costs last year as persistent inflation, the Federal Reserve’s interest rate hikes and normalizing demand from the height of the pandemic continue to dog the formerly burgeoning industry. 

Cramer said that while the industry is likely to see more cuts this year, investors should refrain from becoming overly optimistic about how tech companies and their stocks will fare once more employees are laid off.

“I’m saying that this decline won’t be as bad as the 2000 and 2001 [recession]. It won’t be that. Nor am I saying that tech stocks can rally endlessly on cost cuts,” he said.

Disclaimer: Cramer’s Charitable Trust owns shares of Salesforce and Meta Platforms.