Snapchat to lay off 10% of staff worldwide

Snap has decided to lay off about 10% of employees worldwide. As per the securities filed on Monday, the decision is to “best position our business to execute on our highest priorities, and to ensure we have the capacity to invest incrementally to support our growth over time”.

The company has estimated that the restructuring would incur pre-tax costs of $55 million to $75 million, most of which are severance and other related costs. Further, there will be $45 million to $55 million cash expenditure in future. Most of these costs will be incurred in the first quarter of 2024. 

One of the main reasons that led to this move is the decline in the digital advertising revenue, which has affected other social media platforms as well. Further, Apple's change in privacy policy in 2021 has made it harder for these platforms to track users' ads.

Snap attempted to diversify its ad-based business by introducing SnapChat+ subscription, AI bot, selfie drone, as well as AR glasses. However, in the last quarter of 2023, the company let the AR department go and shut down the project. Due to this, the company has faced a pull back in the stock market, witnessing a 1.8% fall in the price of its shares to USD 16.75 in New York.

Snap’s CEO is hopeful of the company’s revenues this year and gets from its investors regarding the layoff plans. However, the company also said the it might extend into second quarter, if the conditions remain unfavorable.