Snap plans to lay off a fifth of its 6,500-strong workforce, according to a person familiar with the situation, in a dramatic shake-up as the social media group battles a slump in advertising demand.
The Los Angeles-based company had expanded headcount rapidly during the first two years of the coronavirus pandemic, as social media platforms grew rapidly with users spending more time and money online during lockdowns.
However, the boom has this year turned into a deep and broad stock sell-off amid high inflation and a wider economic slowdown, forcing the biggest tech groups such as Meta and Google to freeze hiring and seek out other cost-cutting measures.
Snap is preparing to cull about 20 per cent of its headcount, which stood at 6,446 at the end of June, and restructure its ads team, the person said.
Chief business officer Jeremi Gorman, and Peter Naylor, Snap’s vice-president of ad sales for the Americas, are leaving the company as part of the shake-up, according to a report from The Verge, which was confirmed by Snap.
The company declined to comment on the lay-off figures, which were first reported by The Verge.
Shares in the company fell nearly 3 per cent in after-hours trading on Tuesday following the news.
Snap has lost nearly 80 per cent of its value in the year-to-date, after issuing a profit warning in May and posting bleak second-quarter results in July.
In both instances, it said tough macroeconomic conditions had caused advertisers to slash their budgets, and also blamed increased competition in the sector, and privacy changes by Apple that have made it harder for apps to target advertising and measure the success of campaigns.
In its results statements in July, Snap said it was “not satisfied” with its earnings “regardless of the current headwinds”.
Chief executive Evan Spiegel also said the company planned to focus on product innovation, diversifying revenue and investment in its direct response advertising business in order to address the slowdown.