Snap Inc, the parent company of popular instant messaging app Snapchat, is looking to lay off nearly 1300 employees, or approximately 20% of its workforce, as it continues to bleed money and its stocks continue to take a hit.
According to a report by The Verge, the layoffs will be effective from Wednesday, August 31, and will be affecting some departments of the parent company harder than others.
The mini apps and games inside Snapchat and the company’s hardware divisions, which gave us the Pixy camera drone (whose production was shut down soon after its launch) will be among the severely impacted.
This development seems to be the fallout of Snap’s earlier decision this May to slow down the pace of hiring for the rest of the year. At that time, Snap CEO Evan Spiegel warned investors that its revenue will not be growing as expected either.
This was followed by a rather dismal performance in the second quarter of the year, where it failed to reach or exceed analyst expectations and clocked a net loss of $422 million.
The company also refrained from providing guidance for the third quarter of the year, citing “uncertainties related to the operating environment” and that so far in the third quarter, the revenue was approximately flat on a year-over-year basis. At that time, they added that “forward-looking visibility remains incredibly challenging.”
Both of these led to a further fall in its stock prices by as much as 25% in after-hours trading.
These developments thus serve as the precursors for Snap’s planning to lay off employees, as per a Verge report earlier this month. The Snapchat-parent’s workforce currently amounts to around 6400 employees, and now, one-fifth of them will be facing the axe as Snap looks to make a turnaround.
This decision by Snap has added to a picture that has become increasingly common over the past months – ever since the goose that was 2021 stopped laying golden eggs after the year ended and conditions started to deteriorate.
Numerous companies, including top players such as Microsoft, Netflix, Unacademy, and Byju’s have laid off employees over the past months as they struggled to stay afloat amidst fears of an economic recession and tough market conditions.