Snap Inc (NYSE:SNAP), the parent company of Snapchat, is slashing 20% of its workforce as it restructures for a period of low sales growth lasting into 2023.
The layoffs, which began yesterday, will impact at least 1,280 employees of its 6,400-strong workforce, according to The Verge
Snap’s shares have lost nearly 80% of their value since the start of this year, and the company said in May that it would slow hiring and enforce cost-cutting measures.
As part of the cost-cutting measures, Snap is shutting down its division that produced exclusive short shows with celebrities and other influencers.
In addition, it is also pulling out of its social mapping app, Zenly; its music creation app, Voisey; and the hardware department which includes its drone camera, Pixy and AR spectacles, said NYT.
We had to say goodbye to a number of kind, smart, and creative team members who have contributed to Snap’s growth.If you're hiring, take a look at Snap's Alumni Talent Hub to connect with incredible people interested in hearing about new opportunities.https://t.co/UDyfYYuTc2
— Snap Inc (NYSE:SNAP). (@Snap) August 31, 2022
Challenging macroeconomic conditions
In an email to employees retrieved by NYT, Snap CEO and founder Evan Speigel blamed challenging macroeconomic conditions for forcing his hand.
“While we will continue our work to re-accelerate revenue growth, we must ensure Snap’s long-term success in any environment”
“I am deeply sorry that these changes are necessary to ensure the long-term success of our business.”
Shares plummeted over 85% over the past 12 months.
Impacted by privacy changes from Apple (NASDAQ:AAPL)
Amongst other things, privacy changes implemented by Apple on iOS devices last year have affected the company’s ability to target and measure its digital advertising.
This issue was compounded by global supply chain disruptions and labour shortages and caused brands to pull back on their advertising spending.
Apple’s privacy updates were rolled out broadly in June to prevent digital advertisers from tracking iPhone users without their consent.
Consequently, this has impacted Snapchat’s ability to run targeted advertisements on Apple devices – which has thrown the advertisers off.
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