Snapchat parent Snap to lay off 10% of workforce in fresh round of job cuts

Social media giant Snap has decided to lay off 529 employees, which constitutes 10% of its workforce in a fresh round of job cuts. The Snapchat parent expects to incur pre-tax charges, mainly comprising severance and associated expenses, as well as other charges, with an estimated range of $55 million to $75 million, the company said in a regulatory filing.

Out of this, $45 million to $55 million are projected to be future cash outlays. The primary timeframe for incurring the majority of these costs is expected to be the first quarter of 2024, it added. The shares of Snap were 2% up in pre-market trading.

“On February 5, 2024, we announced a plan to reduce our global headcount by approximately 10% of our global full-time employees. 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 in a filing with the SEC.

The fresh rounds of layoffs came as the technology industry was going through a phase of job cuts. A CNBC report said that 24,000 tech professionals lost their jobs in January alone as the sector continues to witness a significant downsizing wave. Among the recent casualties are cybersecurity and identity firm Okta, as well as video conferencing giant Zoom.

Snapchat is among the social media companies facing the Senate Judiciary Committee where its CEO Evan Spiegel addressed questions on the detrimental impact of their platforms on the well-being of young users.

Investor validation

The fresh round of layoffs came as investors seem to endorse the streamlining efforts by tech corporations, exemplified by Meta's implementation of a "year of efficiency," marked by substantial workforce reductions.

The shares of Meta witnessed an all-time high boost following strong earnings and the announcement of its inaugural dividend. These experts claim that investors view strategic cost-cutting measures as favourable, even amidst increased scrutiny and challenges within the tech industry.