Around 500 Employees Laid Off as Social Media Giant Seeks Efficiency Gains
San Francisco, CA – Snap Inc., the company behind popular social media app Snapchat, announced major layoffs on Monday amounting to around 10% of its global workforce. Approximately 500 employees will be affected by the job cuts as Snapchat looks to restructure and promote in-person collaboration.
The latest round of layoffs come after Snap cut 20% of staff in 2022. The company says the reorganization aims to “reduce hierarchy and promote in-person collaboration.”
Severance Costs Estimated at $55-$75 Million
According to a regulatory filing, Snap expects to incur charges of $55-75 million due to the layoffs, mostly due to severance pay and related termination costs. The company says the majority of costs will impact Q1 2024 results.
Snapchat parent Snap Inc. has seen its share price plummet since 2021 highs. The stock remains below its IPO debut price as the company struggles amid a broader slowdown in digital advertising spend.
CEO Defends Snapchat Before Senate Judiciary Committee
The announcement of significant job cuts comes just days after Snap CEO Evan Spiegel testified before the Senate Judiciary Committee about online child safety. Spiegel defended Snapchat’s approach to protecting minors on its platform.
The layoffs at Snapchat represent the latest round of cuts across the technology sector. Other firms like Microsoft, Google, Amazon and Meta have trimmed headcounts after overzealous pandemic hiring.
Snapchat Remains Popular with 406 Million Daily Active Users
Despite its stock troubles, Snapchat continues to be a popular social media platform, especially among younger demographics. According to Snap, Snapchat has 406 million daily active users engaging with the app’s disappearing messages, lenses, filters and more.
Snapchat+ now has over 5 million subscribers paying $3.99 per month for premium features. However, Snap’s revenue from advertising continues to face macroeconomic headwinds.
The company is hoping to boost efficiency through a flattened organizational structure and strengthened in-person work culture after remote-heavy pandemic years.
Snap Reports Q4, Full Year Earnings on Tuesday
Investors will gain more insight into Snap’s outlook when it reports Q4 and FY 2024 results on February 7. While investors typically welcome cost-cutting measures like layoffs, Snapchat continues to face strong competition from social media rivals like TikTok.
As it pursues a leaner structure focused on collaboration, Snap will need to show shareholders a realistic path to renewed revenue growth in 2024. With 500 employees set to lose their jobs in the latest restructuring, Snap faces challenges on multiple fronts.
