Social media giant Snap, which operates Snapchat, has announced plans to cut “approximately” 10% of its staff.
The firm said in November 2023 it had 5,000 employees, suggesting around 500 people are facing redundancy.
It comes a day before Snap reports its fourth-quarter results – having reported a net loss of $368m (£294m) in the previous quarter in October 2023.
Snapchat said the move would “reduce hierarchy and promote in-person collaboration”.
“We are focused on supporting our departing team members and we are very grateful for their hard work and many contributions to Snap,” a spokesperson told the BBC.
According to its most recent annual report, more than 500 people work for the firm in the UK. It is unclear if any of the cuts will fall in the UK.
Jasmine Enberg, principle social media analyst at Insider Intelligence, told the BBC the layoffs “don’t bode well for the state of Snap’s business” ahead of its latest earnings announcement on Tuesday.
She pointed to rival Meta’s latest results – which showed quarterly profits tripling year-on-year, a surge in users, lower costs and higher ad sales – as “a tough act for Snap to follow”.
“Snap is likely trying to garner some goodwill with investors, who rewarded its competitor for its cost-cutting measures and its continued ‘do more with less’ mantra going into 2024,” Ms Enberg said.
She added that Snap’s advertising revenues have been “slow to recover from the digital ad slowdown”.
It is the second wave of mass redundancies from the social media company, which laid off about 20% of its workers in August 2022.
Snap has attempted to expand into products beyond Snapchat, including experimenting with augmented reality (AR) glasses, dubbed Spectacles.
But the firm has been unable to find a mass market for its other products, and it subsequently closed a division that offered AR services to business customers in 2023.
The latest job cuts come as companies, including Meta and Google, have been grappling with how to balance cost-cutting measures with the need to remain competitive.
According to layoffs.fyi, which tracks job losses in the tech sector, there were more than 232,000 job cuts in the industry in 2023.
Elsewhere, last week the firm’s chief executive Evan Spiegel was grilled alongside the bosses of X (formerly Twitter), Meta, Discord and TikTok at a US Senate hearing about child safety online, where senators’ attention mostly fell on Meta chief executive Mark Zuckerberg and TikTok boss Shou Zi Chew.
Mr Spiegel said in his opening testimony at the hearing that he and co-founder Bobby Murphy built Snapchat as an alternative to other social media platforms, where images shared were “permanent, public, and subject to popularity metrics”.
Supporting growth
The redundancies were announced by the firm in a filing with the US Securities and Exchange Commission.
Snap said that the layoffs would affect staff globally, but did not specify who would be affected further.
“In order to best position our business to execute on our highest priorities, and to ensure we have the capacity to invest incrementally to support our growth over time, we have made the difficult decision to restructure our team,” the firm said.
In its filing, it said the cuts would be “subject to local law and consultation requirements” in each country, which could extend the process.
And it estimated the move could cost it between $55m (£44m) and $75m (£60m) in severance payments “and other charges”.
Source: BBC
