Technology

Snap weighs down Wall Street with reports of mass layoffs

Contacted by AFP, Snap declined to comment. (Photo: 123RF)

New York. Snap (SNAP), the parent company of the popular messaging app Snapchat, came under fire on the New York Stock Exchange on Tuesday after news reports that it could cut about 20% of its workforce, or more than 1,200 employees.

Layoffs will begin on Wednesday at the company, which had just over 6,400 employees at the end of June, according to The Verge, a specialist website citing close sources.

The group’s shares sank after the publication of this information at the end of the session on Wall Street, shedding 2.53%. On electronic exchanges before the official opening, it fell by more than 8.29%.

Contacted by AFP, Snap declined to comment.

Publishing its quarterly results at the end of July, the group has already warned that its turnover growth is slowing down and therefore it will have to cut its costs. The title then collapsed nearly 40% on the New York Stock Exchange.

Like other social networks, Snap is suffering from an overall reduction in advertisers’ ad spending, livelihoods, and Apple’s regulatory change to require users to obtain consent before being tracked for ad targeting purposes.

The chief financial officer indicated during a conference call with analysts that the group “intends to significantly slow down the pace of hiring in order to stall the growth of our workforce.”

Snap also stressed that the short- and medium-term outlook remains “incredibly challenging” and declined to provide financial projections for the third quarter.

It was also announced on Tuesday that Netflix has hired two senior Snap executives: operations manager Jeremy Gorman and US ad sales manager Peter Naylor.

The two newcomers will debut in September on Netflix, the online video site said in a statement.

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