Snap Inc, the parent company of Snapchat, has announced that it will lay off 10% of its workforce, joining the recent wave of job cuts in the tech industry.

The decision was disclosed in a regulatory filing, revealing that approximately 10% of Snap's global full-time employees, or roughly 500 jobs, will be affected.

The layoffs at Snap are allegedly part of an effort to encourage 'in-person' work and foster collaboration by reorganizing the team and reducing hierarchy. This move aims to position the company to execute its highest priorities and support future growth. The restructuring process is expected to incur costs between$55 million and$75 million, mainly severance expenses.

The quarterly earnings report for Snap is scheduled for the next day, with the news about the layoffs causing a 1.5% drop in the company's shares on Monday. This decline suggests that investors are reacting to the layoffs and may anticipate potential implications for Snap's financial performance.

Why does it matter?

The news from Snap is the latest in a trend of job losses in the tech sector, prompting concerns about moderation efforts, especially in an election year that lies ahead. According to data from Layoffs.fyi, around 30,000 tech industry workers have lost their jobs since 2022. Notably, 262,682 tech industry layoffs were recorded in 2023, a significant increase from the previous year's 164,969 cuts.

Snap's decision to lay off employees is not an isolated event. In August 2022, the company announced a 20% reduction in its global workforce, resulting in approximately 1,200 job cuts. As revealed in a regulatory filing, Snap reduced its staff by around 3% when it closed its AR Enterprise business.