Snap adding 100 workers to its layoffs
Maker of Snapchat app is targeting mostly ad and sales units in its latest round of cuts.
Snap Inc., the company behind video messaging app Snapchat, said Thursday that it was cutting about 100 workers in its second round of layoffs in less than a month.
The new layoffs at the Venice-based social media company are mostly in the advertising and sales units, a spokesman said. Earlier this month, the company cut more than 120 engineers and last year laid off workers in a hardware unit responsible for Snap’s once-popular Spectacles sunglasses.
In an emailed statement, Imran Khan, the company’s chief strategy officer, said Snap has had to make “some really tough decisions” as part of a restructuring effort that started last year.
“As a result, new structures have been put in place for content, engineering, sales and many other parts of Snap,” Khan said. “These changes ref lect our view that tighter integration and closer collaboration between our teams is a critical component of sustainably growing our business.”
Snap declined to say whether more layoffs are coming.
The job cuts in advertising and sales reflect Snap’s changing strategy for revenue, analysts say.
The company introduced automated ad sales last year, which significantly decreased Snap’s ad rates but allowed it to make up for those losses with far more sales.
Software-driven sales also reduced the number of staffers needed to craft expensive ads for a growing offering of original content on Snapchat, said Brian Wieser, an analyst for Pivotal Research Group.
“Those are pretty significant cuts to the ad and sales force,” Wieser said. “They may have staffed up under the premise they would invest more in premium video.”
Snap is also trying to pare down costs to become profitable by the end of the year, tech news outlet the Information reported this month.
Snap last year recorded losses of $720 million before interest, taxes and charges such as stock compensation expenses.
In February, the company began subleasing some of its dispersed office space in Venice to relocate workers to a business park in Santa Monica. The move could save the company money in the long run.
The latest layoffs come after several high-profile executive departures and months of criticism about a recent Snapchat redesign, one that celebrities including Kylie Jenner have publicly derided but that investors say is needed to help attract more users.
Snap went public a year ago, staging one of the biggest recent tech intial public offerings of stock, but it has struggled amid growing losses and growth that hasn’t lived up to expectations.
Even after surprisingly good financial results were reported in last year’s fourth quarter, which sent Snap’s stock soaring, shares of the company now trade for less than their IPO price of $17.
Snap shares closed largely unmoved Thursday at $15.86.
That contrasted with many major tech stocks, which bounced back after a sell-off Wednesday.
Facebook shares, pummeled by news about the company’s mishandling of user data, ended a two-day slide by climbing more than 4% to $159.79.
Amazon shares increased just over 1% to $1,447.34 a day after declining on a report that President Trump wanted to “go after” the company.
Alphabet, Google’s parent company, saw its shares climb 3%. Apple shares creeped up just under 1%, and Netflix shares ended trading up more than 3%.