Snap, the parent company of Snapchat, will lay off approximately 10% of its global workforce or 500 employees and expects charges ranging between $55 million and $75 million related to this restructuring effort.
Snap has struggled to reach mass markets for its products, such as its AR glasses and selfie drone. Furthermore, it has experienced significant losses from its advertising business.
The layoffs are part of the company’s strategy to foster “in-person collaboration”
Snap announced in its regulatory filing that it will incur charges between $55 million to $75 million due to charges associated with staff reductions; its share prices fell more than three percent upon this news.
Tech companies are cutting employees as they struggle to make profits. Alongside Snap, Salesforce, Alphabet’s parent company Google and real estate technology startup Opendoor all recently announced layoffs.
SNAP’s mission is to empower people to connect and build community both physically and online, while at the same time encouraging kindness as one of its core values. According to recent research by SNAP, nearly three-quarters of Generation Z and 83% of young adults have experienced some kind of digital risk such as online bullying or harassment; therefore, to address these risks they provide education about being kind online as well as encourage participation at in-person community events.
The layoffs are the second wave of layoffs since 2022
As the economy slows down, tech companies have begun cutting workforce numbers en masse. These layoffs have become a trend over the past several years as companies attempt to cut costs during an economic downturn by eliminating jobs.
Snapchat’s parent company announced in an SEC filing that approximately 10% of their workforce – about 540 employees – will be laid off. These cuts come just one day ahead of Snapchat releasing its earnings report; its previous quarter had exceeded expectations by five percent.
Salesforce recently announced large-scale layoffs. In line with the Worker Adjustment and Retraining Notification Act, which mandates employers provide notice before mass dismissals of employees, Salesforce reduced its workforce by 10% and will close some offices, as well as lower its revenue forecasts to save money and focus on key growth areas. Employees affected will receive severance packages that include health insurance and career resources as part of this retrenchment initiative.
The layoffs are part of a larger wave of layoffs at tech companies
Technology companies have announced thousands of layoffs over the last year due to a combination of factors including an unstable economy, COVID-19 pandemic, and poor business performance. Niantic recently announced it will cut 230 employees as part of a plan to cut costs and focus on its mobile game business; Facebook parent Meta also has reduced employment, particularly at their metaverse custom silicon unit known as FAST.
Tech companies have also begun cutting staff, with cybersecurity firm SecureWorks cutting 300 roles or approximately 15% of its workforce – its second round of layoffs due to losses over recent years and slow sales and client demand being blamed as reasons. Affected employees will receive severance packages.
The layoffs are a sign that Snap is struggling
Snap’s layoffs come at a time when it is struggling with competition from apps like TikTok and Meta, both augmented reality competitors. Furthermore, Snap recently reported a decline in ad revenue.
Layoffs may also indicate that a company is trying to shift their product focus back onto its core features rather than expanding into new areas, making this move increasingly common among tech firms as their strategy changes. It is not unusual for tech companies to reduce staff when changing strategies.
Snap may use layoffs as a strategy to save money; after months of losing money and witnessing its shares decline considerably this year.
This company plans on laying off about 10% of its global workforce, totalling 500 employees. Severance packages will be offered to affected workers and attempts will be made to rehire where possible. Pre-tax charges estimated between $55 million to $75 million due to this action including severance costs and other related expenses.
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