Snap to Cut 10% of Workforce as Job Cuts Continue
Snap plans to lay off 10% of its workforce, amounting to approximately 528 employees. The company has struggled to convert its user base into consistent revenue growth. Snap's decision to cut jobs reflects the ongoing trend of tech layoffs in 2023.
Snap, the parent company of popular photo messaging app Snapchat, has announced plans to lay off approximately 528 employees, which accounts for 10% of its global workforce. This move reflects the ongoing trend of tech layoffs in 2023 as companies navigate economic uncertainty.
Despite its popularity among young users, Snap has struggled to translate its user base into consistent revenue growth, putting it at a disadvantage compared to larger competitors like Meta Platforms, the owner of Facebook. Meta Platforms recently issued its first dividend after implementing staff layoffs last year.
The announcement of these layoffs raises concerns about the state of Snap's business. Jasmine Enberg, a principal analyst at research firm Insider Intelligence, commented, "The layoffs don't bode well for the state of Snap's business. Snap is likely trying to garner some goodwill with investors, who rewarded its competitor for its cost-cutting measures."
Following the news, Snap's shares dropped by 4% to US$16.38.
In a statement, Snap explained that the restructuring of its team was necessary to position the company for future growth and to allocate resources to its highest priorities. The company anticipates pre-tax charges of US$55 million to US$75 million, primarily for severance and related costs, with US$45 million to US$55 million expected to be future cash expenditures. The majority of these expenses will be incurred in the first quarter of 2024.
Snap's decision to downsize its workforce aligns with other tech and media companies, including Amazon and Alphabet, which have also announced layoffs in January. According to an insider, remote workers have been particularly affected by Snap's cuts, as the company has been urging employees to return to the office four days a week since last year.
The tech industry has seen a significant number of job cuts in 2023, with nearly 32,000 workers laid off from 122 tech companies since the beginning of the year, according to Layoffs.fyi, a tracking website. A report by Challenger, Gray and Christmas revealed that the tech sector accounted for the highest number of layoffs across industries in 2023, shedding a total of 168,032 jobs. Microsoft alone announced over 10,000 job cuts.
Snap plans to lay off 10% of its workforce, amounting to approximately 528 employees.
The company has struggled to convert its user base into consistent revenue growth.
Snap's decision to cut jobs reflects the ongoing trend of tech layoffs in 2023.
Source: REUTERS