Snap Inc. plans to lay off 20% of its employees starting Wednesday.
According to The Verge, Snap has been planning these layoffs for several weeks, and the staffing cuts will target the development and hardware departments in addition to Zenly, a social mapping app that Snap purchased in 2017.
An estimated 1,280 employees will be cut from staff. Snap’s stock has declined nearly 80% this year. It fell another 6% in after-hours trading after news of the layoffs broke.
Snap declined comment when reached by TheWrap.
Impacted functions within the Snapchat app will include mini apps and games inside the app, as teams that manage design of these fixtures by developers will receive staffing cuts.
In May the company stated it would ease up on hiring while examining areas in which their budget could be tightened following dissatisfying Q2 earnings that plunged 30%.
Snap noted that “the macroeconomic environment has deteriorated further and faster than anticipated” since it issued guidance in April 2022 in a Securities and Exchange Commission filing.
In a memo to staffers, CEO Evan Spiegel said that the company will hire only 500 additional employees compared to the 2,000 over the last year. In the note, he attributed the slowdown to rising inflation and interest rates, supply chain shortages, the war in Ukraine and labor disruptions — all of which are challenging tech players in recent quarters.
“We believe it is likely that we will report revenue and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) below the low end of our Q2 2022 guidance range. We remain excited about the long-term opportunity to grow our business,” the company said. ”Our community continues to grow, and we continue to see strong engagement across Snapchat, and continue to see significant opportunities to grow our average revenue per user over the long term.”