Snap Inc., the owner of popular social media platform Snapchat, is set to cut approximately 10% of its global workforce, which amounts to around 530 employees. This move comes as the latest announcement of layoffs within the tech industry. In a regulatory filing, Snap Inc. revealed that it anticipates charges between $55 million to $75 million, primarily for severance and related costs. The company expects these expenses to be incurred mostly in the first quarter.
This is not Snap's first instance of job cuts. In August 2022, the Santa Monica-based company had revealed plans to reduce about 20% of its global workforce. Additionally, in the third quarter of 2023, Snap had begun winding down its AR Enterprise business, resulting in a reduction of approximately 3% in its global employee headcount, as stated in a regulatory filing.
Snapchat continues to maintain a strong user base, with 406 million daily average users according to Snap's website. Furthermore, the platform boasts over 5 million Snapchat+ subscribers. Despite its user popularity, the company has been facing challenges that have necessitated cost-cutting measures.
Snap's workforce reduction aligns with a broader trend within the tech industry, as companies grapple with various factors influencing their operations. Microsoft, for example, has announced plans to lay off around 1,900 employees in its gaming division, while online retailer eBay Inc. plans to cut approximately 1,000 jobs, accounting for about 9% of its full-time workforce. Google has also recently confirmed the layoff of hundreds of employees from its hardware, voice assistance, and engineering teams. Additional companies implementing layoffs include TikTok, Amazon divisions Twitch and Audible, and Riot Games.
Investors and stakeholders will be eagerly awaiting Snap Inc.'s fourth-quarter and full-year financial results, which are scheduled to be released on Tuesday after the market closes. The news of the impending layoffs has already impacted the company's stock, as it experienced a decline of more than 3.7% in Monday morning trading.
Snap Inc.'s decision highlights the challenges faced by technology companies in adapting to evolving market dynamics. It is an unfortunate but necessary step as the company strategizes to ensure its long-term growth and sustainability in the competitive social media landscape.
