Instant multimedia messaging app Snapchat is planning to lay off a number of its employees, after the company declared a fall in its profits in the second quarter of the current calendar year (Q2CY22), The Verge reported the development quoting people familiar with the plans.
The net loss of the company widened to $422 million in Q2CY22 from $152 million in the same quarter in 2021. “Our financial results for Q2 do not reflect our ambition,” Evan Spiegel, CEO of Snapchat said.
The share price of Snapchat has fallen over 25 per cent in the last 30 days. On Monday, it closed at $10.41 per equity share. It is yet unclear how many employees the company will lay off. It currently has 6,000 employees.
Since it went public in 2017, Snapchat has been profitable for only one quarter. It had last announced layoffs in 2018.
Currently, the company is reeling under the broader economic slowdown that has pushed the prices of its shares down. However, it is not the only tech company that is hit. Twitter, TikTok and other tech firms have announced layoffs in recent months. Even Meta has announced that it would slow down the hiring process.
The Verge report stated that the company’s revenue is also hurt by Apple’s new ‘Ask App Not to Track’ prompt. It has made it hard for the company to target their ads effectively.
The user base of the company has grown to 347 million users daily, but it has failed to narrow down the losses. Along with it, the company’s plans of selling hardware. like a $230 selfie drone, have not taken off effectively.
Spiegel had warned the employees in May that the company would cut the hiring and look at ways to save ‘additional cost’.
In the last six months, the NYSE Composite index has fallen over 10 per cent and Nasdaq has fallen over 12 per cent.