Snap to cut 10% of workforce in restructuring move
Snap Inc.
$12.53
11:10 01/11/24
Social media group Snap has announced plans to cut a tenth of its global workforce – thought to be around 500 people – as part of a restructuring plan that will cost between $55m and $75m.
The Snapchat parent company said that the decision, which affects full-time workers, was a "difficult" one but will enable the business to "execute on our highest priorities, and to ensure we have the capacity to invest incrementally to support our growth over time".
According to a Snap spokesperson quoted by CNBC, the restructuring's aim is to "reduce hierarchy and promote in-person collaboration".
The move, which comes a day before Snap's fourth-quarter earnings are scheduled for release, follows the company's decision in August 2022 to cut 20% of total headcount, as well as another wave of job cuts in the third quarter of 2023 after winding down of the AR Enterprise business which employed 3% of its workers.
The one-off, pre-tax costs associated with the newest headcount reduction are mainly related to severance packages and will mostly be incurred during the first quarter of 2024, the company said in a regulatory filing.
The job cuts and the timings of them depend on local law and consultation requirements, which could extend this process into the second quarter of 2024 or beyond in certain countries, Snap said. The company had 5,000 employees as of November 2023.
"The charges that we expect to incur are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual expenses may differ materially from the estimates disclosed," the company said.
Snap's share price initially rose on the news after the opening bell in New York, but quickly sunk into the red and was trading down 3.3% at $16.50 by 1150 ET.