The company that runs the social media platform Snapchat will be laying off about 500 workers, or about 10% of its total workforce across the globe.
While the company, Snap, said that the moves are being done in part to “promote in-person collaboration,” they’re also likely being done to cut down on costs..
Following the announcement, shares of the company fell 3% for morning trading, though those losses were pared back to end the day at 1.8% down.
These cuts are just the latest in a series of layoffs that Snap has initiated since 2022. The most recent round happened in November, when the company cut a small number of employees who worked in the product department.
A large round of cuts was last carried out by Snap in August of 2022. Those cuts resulted in 20% of its staff being cut, as well as a total restructure of the company’s business lines.
According to a recent regulatory filing, Snap said it expects to incur charges that could range anywhere from $55 million all the way up to $75 million.
A spokesperson for Snap commented to CNBC this week:
“We are reorganizing our team to reduce hierarchy and promote in-person collaboration. We are focused on supporting our departing team members.”
Snap isn’t the only tech company that has carried out or announced major layoffs in the early part of this year. Almost 24,000 employees in the tech sector were cut during January.
And in the first week of February, Zoom and Okta — an identity and cybersecurity company — have laid staff off as well.
Generally speaking, investors have backed the efforts that tech companies have initiated to cut back on their overall headcount.
Meta, the parent company of Instagram and Facebook, for instance, went through massive workforce cuts as part of its “year of efficiency.” During this, though, the company’s stock reached an all-time high, following strong earnings reports.
It even issued dividends to shareholders, which marked the first time in its history that it has done that.
Similar workforce reductions have happened at Amazon and Alphabet — the parent company of Google.
Like all of these companies, revenue at Snapchat depends highly on how much money is spent on digital advertising with the platform. In recent years, that revenue has sputtered, though it performed relatively well in the most recent quarter.
Snap also recently initiated a share buyback program that totals $500 million, all of which could eventually help to boost its stock price.
That being said, the current price of Snap stock is still well short of what it was when it debuted as a publicly-traded company, and far off the high of about $83 it reached in 2021.
Snap has also been at the center of the tech controversy, with CEO Evan Spiegel testifying last week at the Senate Judiciary Committee over how social media platforms have caused damage to young people in the country.
