Snap joins the list of multiple big tech companies that are shedding their workforce this year. Amid huge losses, Snap has decided to cut back on its workforce and will remove 20% of its employees from their designations. It is a ripple effect of the plummeting stock price of the company, which seems to be losing the trust of many investors.
The company shared Snap CEO Evan Spiegel’s memo on the issue. It highlighted that despite an improvement in growth, the jump wasn’t good enough as their projections. Internal details also reveal a change in leadership as Jeremi Gorman was leaving the company and would now manage the advertisement division for Netflix.
Why did Snap fire 20% of its workforce?
A simple answer is that the company didn’t meet its expected goals and growth. It was among the few companies that hired aggressively during the pandemic. During that time, the usage of all social apps went off the charts and Snap was pumping money to add new features, build new products and boost its revenue. It even rebranded to Snap and now claims to be a camera company.
Interestingly, Snap’s first compact drone Pixy didn’t entice many users. The self-flying drone is now canned and it must have been a huge loss for the company. Snap also acquired Zenly and Voisey and these ventures will see heavy layoffs. It will also rehash the ad sales division and the AR spectacles division too.
Snap’s CEO tried to brand this as a safety move to avoid facing more losses in the coming months. Since its inception, Snap slowly wavered into many territories including AR spectacles, drones, games, etc. All of this seemed exciting but the ongoing Russia-Ukraine war and Apple’s crackdown on cross-app tracking have reduced the profits.
Snap will take a lot of time to recover from this but its employees will have to find new shelter. The memo assured them of severance pay, and all the support needed until they find a new job. But considering most companies are slowing down hiring for 2022, finding a role will be more difficult.