- Snapchat’s parent company Snap Inc. announced it will lay off around 500 employees, or 10% of its workforce, as part of an effort to reduce hierarchy and encourage collaboration. This comes amid a troubling trend of tech industry layoffs.
- Snapchat has gone through multiple rounds of layoffs since 2022, with the largest cut coming in August when 20% of staff was laid off. The company expects one-time charges of $55-$75 million due to the latest job cuts.
- While Snapchat has struggled with fluctuating ad revenue like other tech firms, its recent earnings report showed improved revenue. However, its share price remains below IPO level as it faces ongoing scrutiny alongside peers.
Snapchat‘s parent company Snap Inc. has announced it will be laying off around 500 employees, representing 10% of its global workforce. This latest round of job cuts comes as the tech industry continues to shed jobs despite soaring stock prices.
Background on Snapchat’s Previous Layoffs
The Snapchat maker has gone through multiple rounds of layoffs since 2022. Most recently in November, it cut a small number of product team members. Snap’s last major reduction came in August 2022, when 20% of its staff was laid off and business units were restructured.
Reasons and Impact of the Layoffs
Snap said the goal of the layoffs is to reduce hierarchy and encourage in-person collaboration. The company expects one-time charges of $55-$75 million due to the job cuts. Snap’s stock price fell nearly 3% on the news. The layoffs are part of a troubling trend in tech, with nearly 24,000 jobs lost in the industry in January alone. Other companies like Zoom and Okta have also recently announced cuts.
The Future of Snapchat
Snapchat and other tech firms like Meta and Google rely heavily on digital advertising revenue, which can fluctuate significantly. While Snapchat has struggled in some quarters, its most recent earnings report showed a reversal of its revenue decline streak. The company has also begun a $500 million share buyback initiative. However, Snapchat’s share price remains below its IPO level.
The social media company continues to face scrutiny alongside peers like Meta. Snap CEO Evan Spiegel recently testified before Congress on the impact of tech platforms on youth mental health. While the layoffs may please investors, Snapchat still faces challenges as it aims to boost collaboration and its share price.
