Snap lays off employees once again, over 500 to be shown the door

Snap layoffs: Snap Inc., the parent company of Snapchat, announced on Monday its decision to lay off approximately 528 employees, constituting 10 per cent of its worldwide workforce. The move follows a trend among tech and media companies opting for job cuts. Despite this, Snap's shares rose by more than 2 per cent in pre-market trading.

This reduction marks Snap's ongoing efforts to streamline operations, having undergone multiple rounds of layoffs since 2022. The social media giant foresees pre-tax charges ranging between $55 million and $75 million, primarily covering severance, related costs, and other charges. A significant portion of these expenses, $45 million to $55 million, is expected to translate into future cash expenditures, with the majority incurred during Q1 2024.

Snapchat's parent company last implemented substantial workforce cuts in August 2022, slashing 20 per cent of its staff while restructuring business lines. The current move is part of an organisational shift aiming to reduce hierarchy and promote in-person collaboration. Despite a slight dip in shares during morning trading, investors generally support such efficiency measures in the tech industry.

Tech companies like Meta, Amazon, and Alphabet have pursued similar headcount reductions, often receiving favorable responses from investors. Snap, like its counterparts Google and Facebook, heavily relies on digital advertising revenue. The company recently broke a revenue decline streak in its latest quarter and initiated a $500 million share buyback program.

Snap CEO Evan Spiegel testified before the Senate Judiciary Committee last week, adding to the scrutiny faced by social media executives over the impact of their platforms on young people. Despite challenges, Snap remains below its debut stock price and significantly below its 2021 peak of around $83.

(With Reuters inputs.)