Snap (SNAP.N) 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), 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.”
“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 anticipates pre-tax charges between $55 million and $75 million, mostly made up of severance and related costs, as well as other charges. Of these, $45 million to $55 million are likely to be future cash outlays.
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) and Alphabet (GOOGL.O) that announced layoffs in January. The cut seems to have hurt remote workers the most, according to someone who knows about the situation. This is because Snap has been pushing employees to come back to the office four days a week for the past year.
According to the website Layoffs.fyi, almost 32,000 people have been fired from 122 tech companies since the beginning of the year.
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).
