This 20 % reduction in the workforce reflects the recent difficulties encountered by the social network, and more broadly by several pale stars of American high-tech.
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A social plan of 1,200 people, or 20 % of the workforce. This kind of announcement is unusual in the digital sector. However, this is the measure that SNAP formalized on Wednesday August 31. “It has become clear that we have to reduce our costs to avoid continuing to undergo significant losses,” justified Evan Spiegel, founder of the social network, in a memo at the address of its employees. This wave of layoffs is explained by the difficulties specific to Snap, structurally in deficit since its creation in 2017. But the decision also illustrates more broadly the cold stroke that affects “tech”, after a period of stock market euphoria.
Born five years ago, Snap is known to have introduced the “stories”, a video format of a few tens of seconds. But he has since not managed to carve out a comfortable place in the social media sector. Its number of daily users has certainly believed 20 % in 2021 and exceeds that of Twitter but, with 347 million members, it remains low compared to the 1.9 billion Facebook (3.6 by adding Instagram, Messenger and Whatsapp) or at the billion tiktok.
stock market de -escalation
Above all, the company has never been beneficiary (apart from a quarter at balance at the end of 2021). Last year, despite an increase of 64 % of its turnover to $ 4.1 billion, it lost another 488 million. And its activity deteriorated in 2022: in the second quarter, growth slowed heavily and the loss reached 422 million, against 152 at the same period the previous year. “We are not satisfied with our results,” said Evan Spiegel, providing for savings. SNAP had published figures below the forecasts of financial analysts, however revised down after a warning formulated by management. On the stock market, the title has lost 80 % of its value since the beginning of 2022. However, it resumed 7 % in the United States in the morning of Wednesday, investors seeming to assess the expected layoffs.
Posts will in particular affect many hires made by Snap since the start of the pandemic, which had aroused a stock market euphoria around technological values. Between March 2020 and the end of the first half of 2022, the company had gone from 3,400 to 6,400 employees. In search of $ 500 million in annual savings, management cuts into activities now deemed as non-priority: it stops productions of Snap Originals video, services responsible for creating small applications and games on the platform , the pixey camera drone and Zenly applications (location of its contacts on a map) as well as Voisey (connecting musicians) … According to the information site The Verge, first to evoke the social plan, the “material” division , on which the augmented reality glasses depend, is also affected. These decisions show the difficulty of diversifying for social networks. Snap recently launched a paid version for $ 3.99 per month, but it only offers a few additional features and remains confidential at this stage.
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