Snap, the owner of Snapchat, has announced plans to lay off 10% of its workforce, causing a decline in share prices. This move seems to mirror Elon Musk's X, as Snap aims to make significant cuts to its overall head count.
The reduction is expected to affect more than 500 jobs, considering that Snap had 5,288 full-time employees according to its most recent annual filing. As a result of this news, the stock fell 1.8% during early trading on Monday.
This round of layoffs comes on top of a 20% cut in Snap's workforce that was announced in 2022 when the company faced challenges with slower-than-anticipated revenue growth. However, Snap's fortunes have improved significantly since then, with the stock rising 40% over the past year due to positive market sentiment regarding its cost control and advertising trends.
Snap is not alone in following Musk's example. Other technology companies have also chosen to streamline their operations by reducing staff. For instance, Nextdoor Holdings, a localized social network, disclosed in November its plans to decrease its workforce by 25%.
Explaining the decision, Snap stated in a filing with the Securities and Exchange Commission, "In order to best position our business to execute on our highest priorities and ensure future growth, we have made the difficult choice to restructure our team."
The company anticipates charges ranging from $55 million to $75 million related to these layoffs, primarily in the form of severance and associated expenses. Of this amount, $45 million to $55 million will be paid in cash.
Snap is scheduled to report its fourth-quarter earnings on Tuesday.
