Snap Fires More Than 1,200 Employees Amid Massive Revenue Loss and Share Sell-Off

By Jacob J
September 1, 2022 11:51 +08

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Snap has fired 20 percent of its workforce, or about 1,280 employees, citing lower revenue growth than expected. The massive job cuts at Snap came after the company reported nearly $10 billion in quarterly losses.

The shares of Snap, the parent company of Snapchat, have nosedived nearly 80 percent since the beginning of this year. After the disastrous quarterly results were announced the stock crashed to a new 52-week low.

"The extent of this reduction should substantially reduce the risk of ever having to do this again, while balancing our desire to invest in our long term future and reaccelerate our revenue growth. Overall, the size of our team will remain larger than it was at this time last year," CEO Evan Spiegel said.

Business Restructuring

Snap has a total employee strength of 6,400-strong headcount. After firing more than 1,000 staff at one go the CEO insisted that the company will have more employees at the end of the year than it had at the beginning.

Spiegel added that Snap's business restructuring focuses on three strategic priorities -- community growth, revenue growth, and augmented reality. The company will discontinue investments in Snap Originals, Minis, Games, and Pixy.

"Projects that don't directly contribute to these areas will be discontinued or receive substantially reduced investment," he said justifying the job cuts.

Tech Companies Trimming Jobs

With economic gloom catching up, several companies, especially, tech organizations, have either announced job cuts or frozen hiring.

Many Big Tech companies like LinkedIn, Meta, Oracle, Twitter, Nvidia, Snap, Uber, Spotify, Intel and Salesforce have either laid off employees or frozen hiring amid the global economic downturn.

Google executives have reportedly warned workers to either boost performance or prepare to leave. An internal message circulated among the employees warned that "there will be blood on the streets" if the next quarterly earnings are not good.

Shockingly, tech giant Apple laid off recruiters after warning earlier that an economic downturn was forcing a hiring freeze. Bloomberg News reported that as many as 100 contract workers have been fired, indicating the spending squeeze at the iPhone maker.

The development came two weeks after Apple reported record revenues in the quarter ended June 30.

In July, Microsoft laid off hundreds of employees ahead of its quarterly earnings and amid growing economic uncertainty. The move, the company said, was in a bid to "realign" groups and roles after the close of its fiscal year on June 30, even as the company intends to grow its headcount in the coming months.

Tesla said in June it was planning to axe 10 percent of staff, along with freezing hiring amid stalled Twitter deal, global macroeconomic conditions like chip shortage, rising inflation and high interest rates. Elon Musk had emailed Tesla executives, telling them the electric car-maker needs to pause hiring worldwide and cut its workforce by about 10 percent.

In early July, Meta boss Mark Zuckerberg warned employees that the company was facing one of the worst downturns in its history and that job losses are certain in the near future. The CEO of the tech giant that owns social media companies Facebook and Instagram said in uncertain terms there will be a scaling back of operations and employee departures owing to the tight financial squeeze the behemoth is facing.

Chinese tech giant Tencent said last week it sacked a whopping 5,500 employees after the June quarter revenue dipped 3 percent, which was the company's first quarterly revenue slip after listing.

Earlier in March, Reuters had reported that Alibaba Group and Tencent Holdings were preparing to cut tens of thousands of jobs combined this year.

Smartphone giant Xiaomi said last week it has cut more than 900 jobs as the Chinese economy is witnessing a slowdown. The smartphone giant had revealed that its revenues fell 20 percent in the June quarter. The layoffs affected nearly 3 per cent of Xiaomi's workforce, according to the South China Morning Post.