Snap lets go of over 500 employees

Snap Inc. is set to trim its global workforce by almost 10%, following the trend of several tech companies implementing layoffs since the beginning of the year. The company revealed that these cuts aim to optimize its business focus on key priorities. In a filing on Monday, Snap mentioned a reorganization to reduce hierarchy and encourage in-person collaboration among its teams. 

The stock experienced a 3.1% dip to $16.51 in New York, reflecting a broader market decline. Similar to its peers in social media, Snap has been grappling with a slowdown in ad revenue. To address this, the company is shedding jobs and discontinuing projects deemed non-essential. Both Snap and Meta Platforms Inc. faced challenges stemming from changes to Apple Inc.’s privacy policy in 2021, impacting advertisers’ ability to track users. 

While Meta rebounded with a 25% sales increase in the fourth quarter, Snap seems to face a more challenging path. As of September, Snap employed around 5,400 people, and a 10% reduction could mean the loss of about 540 jobs. The company anticipates these layoffs may continue into the second quarter of 2024 to comply with local regulations. 

Analysts have concerns about Snap’s performance ahead of its fourth-quarter earnings report, especially in comparison to Meta’s strong results. Jasmine Enberg from Insider Intelligence predicts a 3.3% decline in ad revenue for Snap in 2023 compared to the previous year. 

This decision adds to a series of layoffs across the tech industry in 2024, with companies like Microsoft, Alphabet, Amazon, and Salesforce also announcing job cuts. Investors, however, have generally responded positively to these cost-cutting measures, as seen in the increased market value for Meta and Amazon after their recent earnings reports.