After a dismal Q2, Snap Inc., the parent company of photo-sharing platform Snapchat is reportedly planning to slash its workforce by 20 per cent. The company houses more than 6,400 employees which means that over 1,300 could be given the boot in the coming days.
According to sources, the layoffs will start on Wednesday with developers that build mini-apps and games inside the Snapchat app, expected to bear the major brunt. The hardware department responsible for the AR Spectacles, and Pixy camera drone will also have a major wipeout.
Furthermore, employees of Zenly, a social mapping app that was bought by Snap in 2017, and the advertising department could see major chopping.
The mass layoff comes in the backdrop of Jeremi Gorman, Snap’s chief business officer resigning and departing for video streaming giant Netflix.
Moreover, as reported by WION, the layoffs were around the corner, especially after the company reported weak financial numbers in Q2.
In July, after Snap announced its Q2 results, the company’s shares fell as much as 25 per cent. Cumulatively, since the beginning of the year, Snap’s shares have tumbled 80 per cent.
Moreover, Snap’s revenue in Q2 stood at $1.11 billion which missed the projected mark of $1.14 billion. The revenue increased 13 per cent from last year but fell short of the expected growth rate of 16 per cent.
However, what broke the investor’s confidence was Snap informing in its investor letter that the company was not looking to provide any guidance for the third quarter because ‘forward-looking visibility remains incredibly challenging’.
Reportedly, the disruption in the supply chain, labour shortage and record inflation has forced advertisers to pull the plug on their advertising budgets. This has directly affected Snap Inc’s revenue according to the company officials.
The new Apple 2021 iOS privacy update, along with the meteoric rise of short-video platforms like TikTok has further caused the downturn in Snap’s growth plans. Ever since the company turned public in 2017, it has managed to turn profitable only once.
(With inputs from agencies)
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