GitLab Shares Plummeted By 12% As It Announced Laying Off Employees

GitLab has reportedly made the difficult decision of laying off employees. The software company has announced that it is going to lay off 7% of its total employees.

The decision of reducing the headcount comes in the wake of the alarming macroeconomic environment.

GitLab to Reduce its Headcount

The software company is determined to cut its costs and to achieve this, it is to cut down on its workforce.

It was on Thursday when Sid Sijbrandij, the CEO of GitLab sent a message to all the employees. He stated that the company regrets to announce that they have to let go of their hardworking employees.

The market situation and the economic downfalls have forced the software company to make such a harsh decision.

He announced that the company has decided to reduce the headcount of their company by 7%. This means that the company has to cut down on 130 positions.

Under normal circumstances, if a company announces a reduction in its workforce, it means that it would be able to cut costs.

When that happens, the companies are able to make a comeback in the stock market as such decisions tend to regain the trust of the investors.

Unfortunately, GitLab was not able to achieve that despite making the same announcement as all other major companies.

The share prices for GitLab ended up recording a huge downtrend. The software company’s shares plunged by almost 12% following the announcement of the workforce reduction.

Statement by Sijbrandij

The company’s CEO also made a statement pertaining to the performance of its brand throughout the year 2022.

He stated that their company also ended up facing massive challenges in the year 2022 due to the economic downfall. The macroeconomic environment is still tainted and they are trying to cope with it.

Due to the interest rate tightening and high inflation rates, consumers have become very picky when making investments.

Whether it is investing in software stocks or purchasing software-based products, traders/consumers have become very choosy.

Consumers are taking their time before they purchase any software-based products. For now, their main concern and priority are to purchase basic products.

Until the market conditions become favorable and the inflation rates die down, the situation may not recover and come back to normal.

Their company has to manage until the situation comes under control and the business picks up.

Information about GitLab

PitchBook has just shared information about the total headcount of the software company. They have confirmed that the last time they gathered data for the company, it showed that GitLab had 1,860 employees.

The company has been around for a while and it has been competing with GitHub, which is a company backed by Microsoft.

The company has been providing its services for a while and is known for offering enterprise-level services. These services are provided in the software development sector and they also offer great collaboration.

Some major companies that GitLab has been providing its software services include Siemens, Nvidia, UBS, and Goldman Sachs.

Sijbrandij stated that they have been trying their best to reprioritize their spending. This way, they will be able to withstand the downturn that is being recorded in the global economy.

As per the Sijbrandij, they are committed to working on the growth of their company and business. Therefore, they will have to match their pace of spending with the pace of the global economy.

Compensation for the Employees

Sijbrandij has confirmed that they will be issuing severance to the employees who are being released by the company.

He revealed that they are going to give their employees four months’ salary in a single payout. The salary they give out would be equal to the base salary.

In addition to the basic salary, they will be offering accelerated equity vesting to the employees. As for the healthcare premiums, the employees will have six months of coverage.