Shares of Snapchat’s parent company fell in premarket trading after a report that it is planning a round of significant layoffs.
The cuts will affect some 20% of Snap Inc., or 6,400 employees. Meanwhile, Snap’s chief business officer, Jeremi Gorman, and its vice president of sales, Peter Naylor, are both leaving the company for Netflix, where they will head up the streaming giant’s new advertising ambitions.
Snap’s stock price was down almost 8% in premarket trading to $9.25. If it opens at that price, it would be lower than the company’s 52-week low of $9.34. Shares of Snap have fallen almost 80% since the beginning of this year.
Jasmine Enberg, a principal analyst at Insider Intelligence, said in a statement that Snap is facing a number of challenges simultaneously, including recent changes to Apple’s iOS privacy rules and increased competition from the 800-pound social-media gorilla that is TikTok.
“Even so, I wouldn’t count [Snap CEO] Evan Spiegel out,” Enberg added. “Snap still has a growing and loyal user base, and it’s well-positioned to capitalize on its augmented reality offerings for advertising and commerce in the long-term. By going ‘back-to-basics’ and streamlining its focus onto its core product, Snap has a good chance of coming out of this, though it will take time.”
Tech giants in general have seen their stocks battered over the past nine months after a pandemic-driven rally that carried them through most of 2021. However, after another sell-off this week, some tech firms are performing a bit better this morning. Facebook parent Meta is up 2.6% in premarket trading, while Google parent Alphabet is up almost 1%. Netflix and Apple are up 1.94% and 0.38%, respectively.
A number of big-name tech companies haveannounced hiring freezes or layoffssince the start of the year, including Netflix, Coinbase, Lyft, Robinhood, Soundcloud, and Peloton, among others.
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