By Reuters | Updated: February 6 2024
Feb 5 (Reuters) – Snap (SNAP.N), opens new tab said on Monday it would cut around 528 employees, or 10% of its global workforce, a sign that the spate of tech layoffs seen in 2023 could persist as firms grapple with economic uncertainty.
The company, which owns photo messaging app Snapchat, has long struggled to turn its popularity with young users into consistent revenue growth and compete with larger rivals like Facebook-owner Meta Platforms (META.O), opens new tab, which issued its first dividend on Thursday after laying off staff last year.
Snap will report fourth quarter results on Tuesday.
“The layoffs don’t bode well for the state of Snap’s business,” said Jasmine Enberg, principal analyst at research firm Insider Intelligence. “Snap is likely trying to garner some goodwill with investors, who rewarded its competitor for its cost-cutting measures.”
Shares of Snap fell 4% to $16.38.
“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,” Snap said.
The company expects pre-tax charges in the range of $55 million to $75 million, primarily consisting of severance and related costs, and other charges, of which $45 million to $55 million are expected to be future cash expenditures.
The majority of these costs are expected to be incurred during the first quarter of 2024.
Snap joins other tech and media firms such as Amazon (AMZN.O), opens new tab and Alphabet (GOOGL.O), opens new tab that announced layoffs in January. Remote workers seem to be hit the hardest by Snap’s cut, said a person familiar with the matter, as the company has been pushing employees to come back to office for four days a week since a year ago.
Overall, almost 32,000 workers have been let go from 122 tech companies since the start of the year, according to tracking website Layoffs.fyi.
The tech sector shed 168,032 jobs in 2023 and accounted for the highest number of layoffs across industries, according to a report by Challenger, Gray and Christmas earlier this month. That included more than 10,000 cuts at Microsoft (MSFT.O), opens new tab.
© Thomson Reuters 2024
