Just like the photos and videos shared on its social platform, Snap employees are about to disappear as the company braces for another round of layoffs. This time, the cuts will hit the engineering department hardest, where sources are saying about 100 positions will be eliminated.
Previously, Snap laid off a dozen employees in its hardware division last fall, and lost a few dozen more earlier this year during restructuring. The upcoming round – the date of which remains uncertain – will be the company’s biggest ever, and the first round of layoffs will affect the engineering team.
Business news website Cheddar reported the layoffs on Wednesday (March 7), saying that the cuts would be announced internally sometime in the next week and would impact less than 10 percent of the engineering department.
Cheddar noted that Snap had slowed its hiring rate by 60 percent last quarter and withheld cash bonuses for employees at the end of 2017, when internal companywide goals were not met.
Recode noted that Snap had been criticized previously for excessive spending, so the company could simply be trying to work toward profitability by trimming unneeded positions and/or underperforming employees. Profitability is not typically a priority for young growth companies, but it’s certainly possible that its first year as a public company has revealed areas where Snap could tighten up ship.
Going into the new year, as Snap introduced a new system for employee performance evaluations, CEO Evan Spiegel told managers that there would be some tough decisions ahead.
At the same time, Spiegel received a $637 million stock award for taking the company public, which Cheddar noted was the third largest annual CEO payout in recent history.
The move may sound dramatic, but investors don’t seem to be balking. Snap stock was up 2.5 percent before the announcement and returned to roughly Tuesday’s closing price once the news got out.