In an effort to cut expenses in the face of dwindling revenues, the parent company of social media platform Snapchat is letting go of 20% of its workforce, the firm said on Wednesday.
Sales were not meeting expectations, according to CEO Evan Spiegel, in a message to the company’s employees that was published on Snap’s website.
Sadly, he said, “Given our present reduced pace of revenue growth, it has become evident that we must cut our cost structure to prevent sustaining large recurring losses.”
Spiegel said that Snap is reorganising its operations to concentrate on augmented reality, community expansion, and revenue growth.
Everything else “will be stopped or given much reduced investment” if it doesn’t help those areas, he added.
Last October, Snap said that a privacy regulation that went into effect on Apple’s iPhones was hurting its ad revenues, which caused investor concerns about the app’s growth prospects.
The majority of social media networks mainly depend on ad income.
There hasn’t been much positive news from Snap since it reported its first-ever profitable quarter in the last three months of 2021.
After the firm said in an SEC filing that the “macroeconomic environment has worsened more and quicker than expected” and that it would not fulfil its own sales and profit projections in the quarter, Snap shares lost almost half of their value in May, plummeting 43%.
After Snap announced quarterly earnings that fell short of expectations in the latter part of July, shares plunged another 39%.
Over 5,600 people are now employed at Snap, an increase over previous years.
Even with the more than 1,000 layoffs, the corporation claimed that its workforce would still be higher than it was a year ago.
Snap’s action The round of layoffs in the IT sector that have affected the country this year continue on Wednesday.
According to the Seattle Times, fewer than 1% of Microsoft’s sizable staff was let go in July. Coinbase, a cryptocurrency exchange, fired 18% of its workforce, or over 1,100 individuals, in June, while Better.com, a mortgage lender, fired 900 employees in March.
All of these companies—Apple, Twitter, Peloton, iRobot, Oracle, Shopify, and Robinhood—have made workforce reductions this year.
According to Layoffs, the IT sector has eliminated about 75,000 jobs overall so far this year. fyi, which keeps tabs on employment losses in the sector
Snapchat is a video messaging app that deletes postings after they have been seen by recipients and just unveiled a new feature that lets parents see who their children are chatting to.
Like the majority of other social media firms, Snap had a boom during the epidemic as people reduced in-person interaction and spent more time online.
Late September of 2021 saw the highest price of Snap shares, which was over $83 a share.
Following the announcement of the layoffs on Wednesday, Snap’s shares increased by almost 10%, reaching $11 per share.