Snap layoffs to reduce 10% of its employees in fresh job cuts
Snap is expected to incur pre-tax charges, which mainly include associated expenses and comprising severance along with other charges, with a range of $55 million to $75 million.
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Snap to make fresh job cuts by 10%, eyes future growth:
In an effort to neutralize the demanding situation of the digital advertising market and to provide scope for incremental investments in future growth, social media giant Snap Inc. has planned to lay off 10% (529 employees) of its global workforce in a fresh round of job cuts.
The job cuts come due to a slump in the ad market and the challenges the company is facing to expand its core social networking market. The company said that the drastic step has been planned to prioritize and best position its businesses. Snap declared that the mass layoff extends into the second quarter of 2024 as well while the company works to abide by local laws.
Meanwhile, Snapchat parent is expected to incur pre-tax charges, which mainly include associated expenses and comprising severance along with other charges, with a range of $55 million to $75 million, says the company in a regulatory filing.
In line with this, the social media giant is revamping the team to reduce the hierarchies and promote in-person collaboration. The stock dipped 3.1% to $16.51 in New York, tracking a major pullback in the stock market.
The layoffs join the chorus of some major technology companies since the start of 2024 as they plan to go for cost cutting following the pandemic. Microsoft Corp., Amazon.com Inc. Google parent Alphabet Inc., and Salesforce Inc. are some of the major companies that have signaled job cuts in the past month, thus impacting close to 32,000 employees, according to a report by Layoffs.fyi.
Snap, the parent of the Snapchat app, and Meta Platforms were in fact terribly impacted by the changes Apple Inc. made in its privacy policy in 2021, which made it very difficult for the advertisers to track users. However, Meta bounced back by posting a 25% profit in sales in the fourth quarter, which was its biggest quarterly surge in two years.
Snap reported three months ago that it registered revenue growth following two periods of losses but it cautioned that its growth may be halted by the advertiser delays due to the Israel-Gaza war.
Earlier in 2022, Snap had fired 20% of its employees and canceled the projects which it did not expect to add to its growth drive. In one of the announcements made, CEO Evan Spiegel said that he expected the employees to be in the office 80% of the time, effective early 2023.
In another statement, Snap had stated four months ago that it will be shutting down an operation, focused on augmented reality (AR) services for businesses to diversify the ad-reliant company. Closing this operation was likely to cut down at least 170 jobs.
