The parent company of Snapchat is planning to trim about 10% of the engineers in its employ. Photo: Associated Press
Snap SNAP -1.10% is a bit too young to be worried about dieting.
The parent company of Snapchat is planning to trim about 10% of the engineers in its employ, The Wall Street Journal reported Wednesday. An internal memo from the company obtained by the news site Cheddar put the total number of layoffs at 120.
Snap reported 3,069 full-time employees at the end of 2017, which was a gain of 65% from the previous year. But its pace of expansion slowed remarkably late in the year. The company said in its earnings call last month that net head count grew by just a little over 100 workers during the fourth quarter.
Minding the expense line typically isn’t a bad idea for a company that lost, even with several favorable adjustments, more than $720 million last year. But investors aren’t exactly expecting Snap to cut its way into profitability.
Rather, the main question that still hangs over the company is whether its young service has true long-term potential or is a fad that will burn out as fickle teens move on to the next big thing.
Snap’s fourth-quarter results last month were a good sign for the long term as user growth accelerated following a prolonged slowdown. But the company also has shed nearly $3.7 billion in market value since those results after a recent redesign of Snapchat proved controversial.
Mark May of Citigroup cited a “significant jump in negative app reviews” when he downgraded the stock to a sell rating on Feb. 20. Snap shares lost 6% two days later after Kylie Jenner, one of the famed Kardashian clan, tweeted a criticism of the new design.
One celebrity, of course, isn’t going to make or break the service. But the fact that Snap is still vulnerable to such whims indicates that those still employed by the company have a big job ahead.
Write to Dan Gallagher at email@example.com