On Monday, the social media company Snap announced its plan to reduce its global workforce by 10%, equating to approximately 500 employees, as part of "in-person collaboration."
Snap Layoffs in 2024
In a filing with the U.S. Securities and Exchange Commission on February 5, the company announced a team restructuring aiming to "position our business to execute on our highest priorities and to ensure we have the capacity to invest incrementally to support our growth over time," and anticipates charges between $55 million and $75 million.
Snaps' shares dropped about 1% in morning trading. The company has undergone several layoffs since 2022, with the most recent one in November involving product employees.
According to a spokesperson talking to CNBC, Snap is reorganizing its team to reduce hierarchy and encourage in-person collaboration, ensuring support to departing team members. The layoffs will continue until the second quarter of 2024, based on the employment laws in specific countries where the staff is situated.
Snap's Significant Turning Points
Snap achieved a $1.19 billion revenue, a 5% increase from 2023's second quarter, and gained 9 million daily active users during the same period.
CEO Evan Spiegel sent a memo to employees earlier this year, expressing the significant turning point the company had reached, planning to utilize the rest of 2024 as an opportunity to build on the momentum.
Spiegel said that "technology isn't going away," stating the responsibility to make it more human and integrated into daily life to benefit from its positive potential, which, as per Spiegel, is not just an exciting opportunity but "existential."
Snap's Challenges in the Tech Industry
Snap has faced decreasing revenue challenges over the last two years and reduced 20% of its staff after doubling its workforce during the pandemic.
The social media company is the latest in a series of tech companies cutting jobs in 2024, with almost 24,000 tech workers losing their jobs in January alone. This month, cybersecurity and identity company Okta, as well as Zoom, have already laid off staff.
Last week, Snap CEO Evan Spiegel testified before the Senate Judiciary Committee, joining other social media executives facing scrutiny for the harm caused to young people by their platforms.
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Investors typically favor tech companies' initiatives to reduce the workforce. For instance, Meta had a "year of efficiency" with significant workforce cuts, where it reached an all-time high following strong earnings and the announcement of its first-ever dividend.
Amazon and Alphabet have also implemented workforce reductions. Similar to Google and Facebook, Snapchat heavily relies on digital advertising spend. The company has faced challenges in some quarters but recently broke a streak of revenue declines in its most recent quarter. Snapchat has also started a $500 million share buyback program.
Snap stock remains below its initial debut price and significantly lower than its peak in 2021, which was around $83.
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