Snap Inc. cuts 100 more workers in second round of layoffs this month
Snap Inc., the company behind video messaging app Snapchat, said Thursday it was cutting about 100 workers in its second round of layoffs in less than a month.
The new layoffs at the Venice-based social-media company are mostly in the advertising and sales units, a spokesman said. Earlier this month, the company cut more than 120 engineers and last year laid off workers in a hardware unit responsible for the Snap’s once-popular Spectacles sunglasses.
In an emailed statement, Imran Khan, the company’s chief strategy officer, said Snap has had to make “some really tough decisions” as part of a restructuring effort that started last year.
“As a result, new structures have been put in place for content, engineering, sales and many other parts of Snap,” Khan said. “These changes reflect our view that tighter integration and closer collaboration between our teams is a critical component of sustainably growing our business.”
Snap declined to say whether more layoffs are coming.
The job cuts in advertising and sales reflect Snap’s changing strategy for revenue, analysts say.
The company introduced automated ad sales last year, which significantly decreased Snap’s ad rates but allowed it to make up for those losses with far more sales. Software-driven sales also reduced the number of staffers needed to craft expensive ads for a growing offering of original content on Snapchat, said Brian Wieser, an analyst for Pivotal Research Group.
“Those are pretty significant cuts to the ad and sales force,” Wieser said. “They may have staffed-up under the premise they would invest more in premium video.”
Snap is also trying to pare down costs to become profitable by the end of the year, the tech news outlet the Information reported earlier this month.
Snap last year recorded losses of $720 million before interest, taxes and charges such as stock compensation expenses.
In February, the company began subleasing some of its dispersed office space in Venice to relocate workers to a business park in Santa Monica. The move could save the company money in the long run.
The latest layoffs come after several high-profile executive departures and months of criticism about a recent Snapchat redesign, one that celebrities including Kylie Jenner have publicly derided but that investors say is needed to help attract more users.
Snap went public a year ago, staging one of the biggest recent tech IPOs, but it has struggled amid growing losses and growth that hasn’t lived up to expectations.
Even after reporting surprisingly good financials in last year’s fourth quarter, which sent Snap stock soaring, shares of the company now trade for less than their initial public offering price of $17.
Snap shares closed largely unmoved at $15.86 Thursday.
That contrasted with many major tech stocks, which bounced back after a sell-off Wednesday.
Facebook shares, pummeled by news about the company’s mishandling of user data, ended a two-day slide by climbing more than 4% to $159.79.
Amazon shares increased just over 1% to $1,447.34 a day after declining on news President Trump wanted to “go after” the company.
Alphabet, Google’s parent company, saw its shares climb 3%, Apple shares creeped up just under 1%, and Netflix shares ended trading up over 3%.
Twitter: @jrkoren
UPDATES:
1:10 p.m.: This article was updated to include more context about Snapchat and the technology industry in general, and to add comment from Brian Wieser, an analyst for Pivotal Research Group.
This article was originally published at 8:25 a.m.
