Snap, the largest social media company after Snapchat, made headlines on Monday when it announced it would lay off 10% of its workforce, including 500 employees. The move is part of a larger effort “to encourage face-to-face communication,” a spokesperson for the company said.
The decision had no consequences, as Snap’s shares fell almost 3% in early trading. The company, which has made numerous layoffs since 2022, is no stranger to employee restructuring. In November of that year, Snap laid off a handful of employees.
According to details in the regulatory filing, the expected financial impact of these activities is that Snap expects a cost of between $55 million and $75 million. This has happened because the company’s biggest change will take place in August 2022, resulting in a 20% reduction in headcount and the development of the business.
A Snap spokesperson explained the current development as follows: “We are evolving our teams to reduce processes and encourage personal collaboration. We focus on supporting exiting partners. ”
Snapchat joins tech companies cutting jobs in 2024; This trend caused nearly 24,000 tech workers to lose their jobs as of January 1. Other major companies, including Okta and Zoom, also announced hiring this month.
Snap CEO Evan Spiegel’s latest testimony before the Judiciary Committee further highlights the social media giant’s growing concern about the impact of its platform on young people. Despite these challenges, investors are generally supportive of the technology. The company’s efforts are working well. For example, Facebook owner Meta had “years of excellence” that resulted in significant layoffs. This move sent Meta’s share price to an all-time high after it reported strong earnings and announced its first dividend.
The layoff trend is not limited to Snap and Meta, Amazon and Alphabet have also adopted similar strategies. Like its peers, Snapchat relies on digital advertising to generate revenue, and the company has run into trouble in some quarters. However, in its latest quarter, Snap managed to report a sharp decline in revenue. The company also announced a $500 million share buyback.
Despite these efforts, Snap’s stock price remains below its starting price and 2021 high of $83. Social media platforms still face challenges in the digital competitive environment.