Snap, which is the parent company of social media platform Snapchat, is laying off 20 per cent of its employees. If the move is implemented, around 1,280 Snap employees, out of the total over-6,400 workforce, will be fired. Snap had earlier announced to slow down hiring this year amid a sustained loss reported in the last financial year.
As per the company’s filing with the US Securities and Exchange Commission, “On August 31, 2022, we announced a plan to reduce our global headcount by approximately 20 per cent of our global full time employees. The headcount reduction is part of a broader strategic reprioritization by the company to focus on our top priorities, improve cost efficiencies, and drive toward profitability and positive free cash flow.”
Snap’s stock has tanked nearly 80 per cent since the beginning of this year.
According to a report by the Verge, Snap CEO Evan Spiegel in a memo on Wednesday said that the company was “restructuring our business to increase focus on our three strategic priorities: community growth, revenue growth, and augmented reality.”
“Unfortunately, given our current lower rate of revenue growth, it has become clear that we must reduce our cost structure to avoid incurring significant ongoing losses,” Spiegel wrote in the memo.
“While we have built substantial capital reserves, and have made extensive efforts to avoid reductions in the size of our team by reducing spend in other areas, we must now face the consequences of our lower revenue growth and adapt to the market environment.”
Reports earlier surfaced that Snap was set to sack employees and was in early stages of planning layoffs.
The job cuts at Snap were coming after the company posted disastrous quarterly results (Q2) amid poor future forecast.
Snap suffered nearly $10 billion loss and its shares hit a new 52-week low over disappointing quarterly results last month.
The company reported a net loss of $422 million compared to $152 million in the prior year as it “substantially” reduced hiring.
Snap is also canceling its original shows, in-app games, and several other projects as “part of a corporate restructuring”. This means that Snap Originals, Games, Minis, and Pixy will be discontinued as part of the move.
“We are restructuring our business to increase focus on our three strategic priorities: community growth, revenue growth, and augmented reality. Projects that don’t directly contribute to these areas will be discontinued or receive substantially reduced investment,” Spiegel’s memo to Snap employees read.
(With agency inputs)
Read all the Latest Business News and Breaking News here