DraftKings has joined FedEx and Rivian Automotive in announcing job cuts, aligning with a growing trend among US corporations. The company announced the move aims to boost efficiency and will affect about 140 jobs.
A Major Portion of the Job Cuts Are in Europe, Asia, and the Middle East
The majority of the impacted positions are located in Europe, Asia, and the Middle East. These 140 cuts will mainly affect engineering and HR roles tied to hiring as the company expects slower hiring rates in 2023.
According to sources, the layoffs at the Boston-based company impacted 15 employees in Massachusetts, where the company has a workforce of over 1,300 individuals.
A spokesperson for DraftKings noted that the recent workforce reduction was not caused by a slowdown in business or economic uncertainties, which is a different situation than many other companies facing job cuts.
The spokesperson explained that the company is focused on improving its operational efficiency and regularly evaluates its teams to ensure alignment with its goals for 2023 and beyond. This led to the reorganization of some teams, resulting in the elimination of around 140 positions.
The news of the job cuts at DraftKings was made just days after in-person sports betting was officially launched in Massachusetts casinos. The company is among the select few that have received preliminary approval from regulators to offer mobile sports betting, which is seen as an important step in the direction of accepting bets in March.
It is worth noting that in 2021, Jason Robins, the CEO of DraftKings, had pledged to increase the number of employees in Massachusetts if sports betting was legalized in the company’s home state. The promise was made in response to the growing demand for sports betting services and the increasing popularity of this form of entertainment.
Investors React Positively to the Layoff Announcement
Despite the cuts representing a small fraction of the company’s total workforce, which corresponds to about 3.5%, DraftKings stock saw a significant increase of 10% and closed at $16.48 on the day of the announcement.
Investors seem to have given the go-ahead for DraftKings to implement job cuts. The positive market reaction to such announcements is a curious phenomenon to examine. On the one hand, it could be considered dystopian that investors are applauding layoffs. It raises questions about the underlying business model when a company claims it can function with fewer employees.
The outcome of DraftKings’ layoff of only 3.5% of its employees is yet to be determined. This reduction in the workforce is one of the smaller ones seen in the tech industry to date.