Snap Announces 500 Job Cuts Amid Industry-Wide Layoffs

Snap, the social media company behind Snapchat, has revealed its decision to cut 10% of its global workforce, affecting approximately 500 employees, CNBC News reports.

The company says this move is attributed, in part, to a strategy aimed at fostering “in-person collaboration.” As a consequence, Snap’s shares experienced a nearly 3% decline during morning trading.

The company has been no stranger to staff reductions, having executed multiple rounds since 2022. In November of the same year, a smaller number of product employees faced layoffs.

According to a regulatory filing, Snap anticipates incurring charges ranging from $55 million to $75 million due to the workforce reduction. This decision follows the company’s last major round of cuts in August 2022 when 20% of the staff was laid off, accompanied by a restructuring of its business lines.

A spokesperson for Snap, speaking to CNBC, stated, “We are reorganizing our team to reduce hierarchy and promote in-person collaboration. We are focused on supporting our departing team members.”

In the broader tech landscape of 2024, Snap joins the ranks of companies implementing layoffs. In January alone, nearly 24,000 tech workers lost their jobs, with cybersecurity firm Okta and video conferencing platform Zoom also making staff reductions.

Investors have generally supported tech companies’ efforts to streamline their workforce. For instance, Meta, the parent company of Facebook, implemented a “year of efficiency,” leading to substantial workforce reductions. Meta’s stock reached an all-time high after reporting strong earnings and announcing its first-ever dividend.

Much like its counterparts Google and Facebook, Snapchat heavily relies on digital advertising spend for revenue. Although the company faced challenges in some quarters, it managed to break a streak of revenue declines in its most recent quarter. In addition, Snap initiated a $500 million share buyback program.

Despite these efforts, Snap’s stock remains below its debut price and significantly off its 2021 high of around $83.