Report: Snap to begin laying off 20% of workforce this week
Snap Inc. reportedly is about to begin laying off around 20% of its workforce as soon as Wednesday, according to a report published today in The Verge.
The layoffs are said to hit some departments harder than others, with a team working on ways for developers to build mini-apps and games inside Snapchat expected to be severely affected. Zenly, a social mapping app acquired by Snap is 2017, is also expected to be hit hard by the layoffs. Other divisions likely to be affected by the layoffs include Snap’s hardware division, with the advertising sales division also expected to be restructured.
Snap so far has declined to comment on the report. Snap had previously said that it only planned to slow hiring growth but had not mentioned any plans to reduce its headcount.
The first sign of trouble at Snap came in May when the company issued a profit warning. The company’s worsening financial results were then reflected in lower-than-expected quarterly earnings in its most recent quarter in July. For the quarter ended June 30, Snap reported a loss of two cents per share and adjusted earnings before interest, taxes, depreciation and amortization of $7.19 million, down from $117 million in the same quarter of 2021.
The only bright spot in Snap’s figures was an 18% year-over-year increase in daily active Snapchat users to 347 million. Increasing users, while always welcomed by any company, has not countered Snap’s worsening financial situation.
“While the continued growth of our community increases the long-term opportunity for our business, our financial results for Q2 do not reflect our ambition,” Snap Chief Executive Officer Evan Spiegel said at the time. “We are evolving our business and strategy to reaccelerate revenue growth, including innovating on our products, investing heavily in our direct response advertising business and cultivating new sources of revenue to help diversify our topline growth.”
The decline of Snap’s outlook is also reflected in its share price. After peaking at $83.11 in September 2021, the company’s share price has dropped 87% in the past year, closing regular trading today at $10.01. Following The Verge layoff report, Snap shares continued their slide, down a further 5%.
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