Spotify Confirms Layoffs for 200 Employees in Latest Blow to Tech Workers
Key takeaways
- Spotify is laying off 2% of its workforce, or 200 employees, in a significant restructuring of its podcast division
- The move comes after the streaming platform laid off 6% of its global headcount earlier this year
- The stock jumped 4% at the news, with Spotify up over 90% since the start of 2023
While it might seem like the worst of tech’s mass layoffs are over, the latest news that streaming platform Spotify is cutting over 200 employees this week is another reminder that some workers are very much still feeling the heat. It’s happened thanks to Spotify reorganizing its podcast division, which left Wall Street pleased at the move and adding value to Spotify’s shares. Here’s the lowdown.
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What has Spotify announced?
Spotify, which hosts music and podcasts on its wildly popular streaming platform, has announced it’s laying off another 2% of its workforce, totaling roughly 200 employees. The latest job losses come on top of the 6% layoffs the company conducted earlier this year.
The majority of the losses are in the podcast division, which Spotify’s vice president, Sahar Elhabashi, said in an internal memo it would be reorganized into a new structure. “This fundamental pivot from a more uniform proposition will allow us to support the creator community better,” she said.
The podcast division will merge into one Spotify Studios division to produce more original Spotify podcasts. According to the memo, the company will also focus on expanding its Spotify For Podcasters program to help more content creators make money from the platform.
What was the market reaction?
Wall Street clearly liked what it heard from the dominant audio platform, with Spotify shares up 4% yesterday at the news. The share price has performed well in 2023, along with the rest of the tech market, climbing 93% since the start of the year.
Spotify’s stock performance this year has so far been boosted by a good earnings report, growing monthly active users and strategic layoffs to help increase cost-saving measures. It’s a sharp contrast to struggling streaming platforms like Netflix and Disney Plus, both of which have recorded subscriber losses in the last quarter.
But there are question marks over Spotify’s operating expenses, which at 36% last quarter, streaked ahead of its revenue gains. Laying off workers and operating a leaner company will help to reduce the overall burden, but it’s one for investors to keep careful watch over to see if the situation improves.
The bottom line
Spotify has made a number of savvy moves to operate efficiently and capitalize on its big monthly subscriber boost from the first quarter. Podcasts are a big money maker for the company — while laying off employees is never a good situation, Spotify is looking towards the long-term growth of the platform.
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