Snap to Lay Off Workers Amid Poor Q2 Performance
Last Monday, rumours circulated that Snap Inc is laying off a number of its 6,000 employees. The leaks emerge as the company attempts to land on its feet following a disappointing second quarter (Q2) earnings report.
The Snapchat parent company has faced roadblocks in its expansion to become an extended reality (XR) hardware vendor through its Pixy immersive drone and the Spectacles augmented reality (AR) wearable.
Recently, Apple’s new ‘Ask App Not to Track’ prompt blocked Snapchat’s advert targeting efficiency due to the number of iPhone and iPad users opting into the security feature. The global economic downturn is also contributing to Snap’s suffering quarterly performances.
Snap Inc has not commented on the situation, although the company did not release its Q3 forecasts. Additionally, the most recent potential lay-offs do not mark the firm’s first struggle this year.
Despite repeated quarterly losses, Snap Inc continues to power on and expand its user base. When the social media giant unveiled its Q1 losses, Snap Inc also highlighted how its Snapchat users grew by 18 percent during Q1, achieving 332 million users in May.
According to a report by Insider Intelligence, Snapchat’s user base will grow to roughly 493 active users in 2022.
During this year’s Snap Annual Summit, the firm announced a lineup of new solutions to grow its expansive XR portfolio. Amongst Snap’s announcements were:
- Pixy, Snap’s AR-ready drone, with photo and video editing abilities
- Improvements to the Spectacles software development kit to remove hurdles for third-party developer pipelines
- AR Lens kit, Lens Studio, and Camera Kit optimisation
- Upcoming Snapchat eCommerce tools
- Enterprise-grade AR training and boarding via the Snap Focus online academy
Snap’s H1 Losses
In May, reports first emerged, showcasing Snap’s downturn in the stock market due to its underperforming Q2 report, where the company’s stocks fell by 32 percent, forcing it to lower future quarterly forecasts.
The news comes as social media stocks across the board dropped by $100 billion in May, with major technology firms such as Alphabet (Google) and Amazon falling short of expectations.
In Q1, Snap Inc also accounted for roughly $360 million in losses, and the firm missed its $1.07 billion sales expectations, earning around $1.06 billion.
At the start of the year, Snap Inc reported that its stocks were worth roughly $42 each; currently, the company’s stocks are worth approximately $11.55.
The news comes as Meta is combating similar disappointing financials. In June, the Menlo Park-based firm announced plans to dismiss low-performing staff to cut costs after its disappointing first half of 2022.
In a leaked internal memo, Meta outlined how underperforming employees are “failing the company.” Additionally, the Menlo Park-based firm is reshuffling its Reality Labs XR research and development (R&D) division following its recorded $10 billion profit loss.