Silicon Valley Slump: Snap to Lay Off 20% of Employees

Snap, the company behind social media platform Snapchat, is laying off approximately 20 percent of its more than 6,400 employees, according to sources.

The Verge reports that Snap is planning to lay off 20 percent of its workforce of over 6,400 employees. The layoffs have reportedly been planned for several weeks and will begin on Wednesday, affecting some departments worse than others. The team working on ways for developers to build mini-apps and games inside Snapchat is expected to see severe cuts, as is the social mapping app Snap bought in 2017 and has since run separately.

Snapchat founder and CEO Evan Spiegel, seen in June 2022, informed employees of layoffs due to ‘the consequences of our lower revenue growth’ (AFP)

Snap’s hardware division is also expected to face major cuts, the division has been responsible for Snap’s AR Spectacles glasses and the pixy camera drone that was recently canceled after being sold for just a few months. Snap’s ad sales organization is also facing restructuring following the departure of the company’s chief business officer, Jeremi Gorman, who left to run ads for Netflix.

Snap’s stock price has lost almost 80 percent of its value since the start of this year and the company announced that it was slowing hiring in May in an effort to cut costs. Shortly afterward, it delivered extremely poor earnings for the second quarter and said it would not be forecasting results for the third quarter. The company’s stock suffered a catastrophic 36 percent drop in July based on disappointing earnings.

Snap hired aggressively during the pandemic. It entered March 2020 with 3,247 full-time employees and ended last quarter with 6,446, a 38 percent increase from the same time the year previous. However, Snap’s business has not continued to thrive coming out of the coronavirus pandemic, primarily due to recession fears and the issues it faced navigating Apple’s crackdown on ad tracking across iOS apps.