Snap, the parent company of the social media platform Snapchat, plans to lay off twenty per cent of its employees.
Earlier this year, Snap announced that it is slowing down hiring amid the sustained loss reported in the last FY. The head office employs over 6,400 employees and around 1,280 Snap employees will be laid off if the company's plan comes to fruition.
“On August 31, 2022, we announced a plan to reduce our global headcount by approximately 20 per cent of our global full-time employees. The headcount reduction is part of a broader strategic reprioritisation by the company to focus on our top priorities, improve cost efficiencies, and drive toward profitability and positive free cash flow, " As per the company’s filing with the US Securities and Exchange Commission.
Snap’s stock dropped to nearly 80 per cent since the beginning of 2022. Snap CEO Evan Spiegel was compelled to share a memo with his staff, in which he said that the company would be restructured to increase focus on the three strategic priorities: community growth, revenue growth and augmented reality, as reported by Verge.
"Unfortunately, given our current lower rate of revenue growth, it has become clear that we must reduce our cost structure to avoid incurring significant ongoing losses," he added.
The layoffs, which Snap has been planning for the past several weeks, will hit some departments harder than others, The Verge also reported. The team working on ways for developers to build mini-apps and games inside Snapchat will be severely impacted while supporting apps will also receive deep cuts.
The company’s ad sales organisation is also being restructured with Jeremi Gorman, Snap’s chief business officer, departing to run ads for Netflix.
Snap has suffered a nearly $10 billion loss and its shares hit a new 52-week low over disappointing quarterly results last month.
The company reported a net loss of $422 million compared to $152 million in the prior year as it “substantially" reduced hiring.