Social media giant Snap, which operates the Snapchat, announced plans to cut approximately 10% of its staff. The company said in November 2023 that it had 5,000 employees, suggesting that around 500 people would be laid off.
This comes a day before Snap releases its fourth quarter results, having reported a net loss of US$368 million (294 million) in the previous quarter in October 2023. Snapchat said the move would reduce hierarchy and promote collaboration guys.
We are focused on supporting our departing team members and are very grateful for their hard work and many contributions to Snap, a BBC spokesperson said.
According to its most recent annual report, more than 500 people work for the company in the UK. However, it is unclear whether any of the cuts will occur in the UK. Jasmine Enberg, lead Social Media analyst at Insider Intelligence, told BBC that the layoffs are not a good sign for the state of Snap’s business, ahead of its latest earnings announcement on Tuesday.
Jasmine pointed out her rival’s latest results, Meta which showed quarterly profits tripling year over year, an increase in users, lower costs and higher ad sales, as a tough act for Snap to follow.
Snap is likely trying to garner some goodwill with investors, who have rewarded its competitor for its cost-cutting measures and its continued mantra of doing more with less through 2024, the analyst said.
She added that Snap’s advertising revenue has been slow to recover from the slowdown in digital advertising. The social media company had already laid off 20% of its workers in August 2022.
Snap has tried to expand into products beyond Snapchat, including experiences with augmented reality (AR) glasses, dubbed Spectacles. But the company was unable to find a mass market for its other products and subsequently closed a division that offered AR services to business customers in 2023.
The latest job cuts come at a time when companies including Meta and Google have struggled to find a balance between cost-cutting measures and the need to remain competitive. According to layoffs.fyi, which tracks job losses in the technology sector, there were more than 232,000 job cuts in the industry in 2023.
Last week, the company’s chief executive, Evan Spiegel, was grilled alongside the heads of X (formerly Twitter), Meta, Discord and TikTok at a US Senate hearing on child safety online, where the senators’ attention fell mainly about Meta CEO Mark Zuckerberg and TikTok boss Shou Zi Chew.
Spiegel said in his opening statement at the hearing that he and co-founder Bobby Murphy built Snapchat as an alternative to other social media platforms, where images shared were permanent, public and subject to popularity metrics.
Supporting growth
The layoffs were announced by the company in a document filed with the U.S. Securities and Exchange Commission. Snap said the layoffs would affect employees around the world, but did not specify who would be most affected.
To better position our business to execute on our highest priorities and to ensure we have the ability to invest incrementally to support our growth over time, we have made the difficult decision to restructure our team, the company said.
In his document, he stated that the cuts would be subject to local legislation and consultation requirements in each country, which could broaden the process. And he estimated that the change could cost between US$55 million (44 million) and US$75 million (60 million) in compensation and other charges.
*With information from the BBC.
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