Following the expected guidance miss, Snap Inc. (NYSE: SNAP) is rumored to be considering letting go 20% of its employees.
The report, broke by The Verge, relayed what people familiar with the matter said of the plans of cutting one-fifth of the tech firm’s 6,400 workforce. The layoffs have reportedly been in the pipeline for weeks and will begin on Wednesday.
Since the story broke, the company’s share price plunged, dropping by almost 7% in after-hours trading. The firm’s shares have plummeted nearly 80% year-to-date.
The people said that some departments would feel the cut, including the Mini division that aims to allow developers build apps and games within the platform, as well as the Zenly team which works on the social mapping app since Snap bought the firm in 2017.
The hardware division working on AR-enabled Spectacle glasses and the Pixy camera–the latter launched just this past April–is also expected to feel the layoffs.
Aside from the layoffs, Snap is also reportedly losing its chief business officer and top ad exec Jeremi Gorman. Gorman, alongside the firm’s vice president of ad sales for the Americas Peter Naylor, will be joining Netflix’s ad division as the president of worldwide advertising and the lead of ad sales, respectively.
The two Snap execs are joining the video streaming giant as it pushes through with its ad-based tier subscription model.
The effort comes on the heels of the company’s announcement that it is likely to report revenue and adjusted EBITDA “below the low end of [its] Q2 2022 guidance range.” This grim outlook sent the shares falling 34.36%.
Back in June 2022, the ephemeral social network announced that it would be working on a premium subscription model service for its flagship as well, called Snapchat Plus, in a bid to increase revenue per user.
Snap last traded at US$10.01 on the NYSE.
Information for this briefing was found via The Verge and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.