MoonPay Lays Off 10% of Staff Amid Crypto Bull Run Due to Past Over-Investments!

tamir
Thu, 06 Jun 2024 16:43:29 +0000
Crypto Payments, Layoffs, ticker, Ivan Soto-Wright, MoonPay

Crypto payments processor MoonPay has laid off 10% of its workforce, citing high-cost structures and lower-than-expected operating margins. This decision comes despite the company’s claim of being financially sound with “years of runway” ahead. However, the cyber rating agency PayRate42 confirmed MoonPay‘s Orange Risk and Orange Compliance ratings, stating that layoffs in a bull cycle suggest a forward-looking management team.

The Layoff Announcement

In an internal email obtained by The Block, MoonPay co-founder and CEO Ivan Soto-Wright addressed the layoffs, explaining that the company, while cash-flow positive, needs to optimize its cost structure. “Today we are implementing a series of role eliminations, role relocations, and structural changes which impact about 10% of our staff,” Soto-Wright wrote.

The email did not disclose the exact number of employees affected, but based on MoonPay‘s current headcount of around 300, this reduction translates to approximately 30 people.

Financial Performance

Despite MoonPay’s stable financial position, Soto-Wright emphasized the need for these adjustments to address the company’s high operating costs. “Our operating margins are unfortunately not where they should be,” he noted. “Although we are cash-flow positive, our cost structure is too high due to over-investment in some areas and geographies. Ultimately, this is on me as CEO and it would be irresponsible to our team and our shareholders not to address this.”

Affected employees are expected to receive separation packages, and Soto-Wright highlighted the importance of ensuring these employees continue to have the opportunity to be shareholders in MoonPay.

The layoffs come amid MoonPay’s launch of several new products and services. Recently, the company introduced a new web3 tool platform for brands entering the crypto space, integrated PayPal to facilitate crypto purchases and sales for U.S. users, and partnered with BitPay to streamline crypto transactions.

Background and Risk Assessment

MoonPay, backed by high-profile investors such as Paradigm and Coatue, was valued at $3.4 billion following a $555 million Series A financing round in 2021. However, the company has faced significant staffing changes, with at least 40 employees having left or been let go in the past year.

Given these developments, PayRate42 has included MoonPay on its Orange Risk and Orange Compliance lists. This designation reflects an assessment of the company’s potential financial and regulatory risks. Despite the announced layoffs, PayRate42 maintains this rating, noting that the company’s management is acting responsibly and forward-looking by optimizing costs even during a crypto bull cycle. Such proactive cost management demonstrates a commitment to financial prudence and long-term stability.

Go to the MoonPay profile on PayRate42.

Investors and users are advised to monitor MoonPay’s ongoing adjustments and assess their impact on the company’s operational and compliance landscape. The strategic move to lay off staff, despite a robust financial position, underscores a commitment to maintaining a sustainable business model amid evolving market conditions.