Why is Snap laying off workers?
Snap Inc., the powerhouse behind Snapchat, takes a significant step by reducing its global workforce by roughly 10%, affecting around 530 employees. The layoffs at Snap place them in the lineup of tech giants navigating through the challenges of restructuring.
The company, headquartered in Santa Monica, California, has projected that it will face between $55 million to $75 million in costs, primarily attributed to severance and related expenses. These financial impacts are anticipated to be most pronounced in the first quarter.
This isn’t Snap’s initial foray into downsizing. Back in August 2022, the firm made headlines with its decision to cut about 20% of its staff. Moreover, in the third quarter of 2023, Snap began phasing out its AR Enterprise business, leading to a 3% reduction in its workforce, as disclosed in a regulatory filing.
Snapchat remains a digital haven for 406 million daily users, and its premium service, Snapchat+, boasts over 7 million subscribers. Yet, Snap’s recent decision underscores a broader trend within the tech sector, where layoffs are becoming increasingly common.
Notably, Microsoft has announced layoffs affecting around 1,900 employees within its gaming division. Similarly, eBay Inc. is set to reduce its workforce by approximately 1,000 positions, marking a 9% cut in its full-time staff. Google, too, has revealed plans to slim down its hardware, voice assistance, and engineering teams. This wave of restructuring is not isolated to these companies alone; TikTok, Amazon’s Twitch and Audible, and Riot Games have also joined the ranks of those cutting jobs.
What is the impact of these layoffs to Snap shares?
As the tech industry braces for these changes, Snap is poised to release its fourth-quarter and full-year financials shortly after the market closes on Tuesday. In anticipation, Snap’s stock saw a 2.7% decrease in Monday afternoon trading. This trend reflects the sector’s ongoing adjustments as companies strive to navigate an evolving landscape, emphasizing the need for resilience and adaptability in the face of uncertainty.
How can Whitten and Lublin help?
In Canada, Snap employees not part of a union are entitled to receive their full severance pay in the event of job loss due to downsizing or corporate restructuring. Various factor can impact a severance package, potentially spanning up to 24 months of pay. In case of mass layoffs of 50 people or more in Ontario, employees may be entitled to a greater severance package. Those not receiving their complete severance amount have the right to pursue compensation. We advise seeking legal counsel to ensure individuals facing layoffs at Snap receive their entitled compensation.
At Whitten & Lublin, we understand the challenges associated with job loss or termination, recognizing it as a stressful experience. Our team of experienced employment lawyers will guide you through the available legal avenues. This ensures you receive the rightful compensation owed to you. We encourage those affected by recent layoffs in Canada to reach out to us for a consultation, accessible through our online portal or by phone at (647) 951-7460 today.