The news will affect the jobs of more than 1,200 employees at the tech giant and comes as broad economic conditions have deteriorated in recent months amid rising inflation and interest rate hikes by the Federal Reserve. The recent market downturn has hit the technology sector particularly hard, where news of hiring freezes, layoffs and other cost-cutting measures have dominated the headlines for months.
Snap CEO Evan Spiegel announced the news Wednesday in a statement shared with CNN Business, saying the company will restructure to “focus on three strategic priorities: community growth, revenue growth and augmented reality.”
“As a result, we are discontinuing several projects, reducing the size of our team by approximately 20 percent, and announcing the promotion of Jerry Hunter to chief operating officer,” Spiegel added.
The Chief Executive continued, “Change of this magnitude is always difficult and we are focused on supporting our departing team members through this transition. We are deeply grateful for their many contributions to Snap.”
Snap reported that it had 6,446 full-time employees in the second quarter of 2022, according to a filing from the U.S. Securities and Exchange Commission. Snap stock is down more than 75% year-to-date. Snap’s shares took a big tumble last month after the company reported dismal sales growth and warned investors the economy was deteriorating faster than expected. In a separate memo to Spiegel employees, shared publicly online, the chief executive said executives will notify those affected as soon as possible.
“In the United States, we will provide at least four months of compensation compensation, as well as financial support with COBRA, giving team members until the end of the year to find new opportunities while continuing to receive compensation and healthcare benefits from Snap,” he wrote .
He added that the “magnitude of that reduction” should “significantly reduce the risk of ever having to do this again”.