Disappearing profits
Snap Inc., the parent company of Snapchat, revealed another quarter in the red yesterday, taking the ephemeral messaging service’s cumulative loss to some $10.8 billion since 2015.
Investors haven’t received the news kindly. At the time of writing, Snap shares are currently down more than 30%, with sentiment not helped by rivals such as Meta, Amazon, and Alphabet all reporting strong growth in their digital advertising businesses. The news means that, out of the last 36 quarters, Snap has turned a profit in just one, back in Q4 2021 — a false dawn for the company's finances at the time. Perhaps preemptively, a day before the earnings release, Snap announced it was slashing 10% of its workforce — its largest cut since a 20% reduction in 2022.
There was a faint silver lining, as the company announced progress on Snapchat+, the platform's premium tier in which users pay $3.99 a month for exclusive features that likely mean little to those of us who aren't Snapchat-power-users, but include: a Friend Solar System, Chat Wallpapers, and a Friend Snapscore Change. That service now has 7 million paying subscribers. Unfortunately, Snap’s more ambitious projects — from AR smart glasses like Spectacles to the short-lived camera drone Pixy — have mostly drained resources without delivering to the bottom line.
Downsizing
Snap isn’t alone in slashing jobs, as tech companies continue to trim their headcounts despite giants in the industry generally thriving. Indeed, according to layoffs.fyi, over 33,000 tech workers have lost their jobs in 2024 already, with Amazon, Microsoft, eBay, DocuSign and many others reporting job cuts.
