Spotify, an audio streaming service has announced that it will let go of 1500 employees as part of its strategic adjustment.
When will the streak of layoffs end? The entire years of 2022 and 2023 have witnessed mass layoffs, 2022 being the peak. Many big tech companies let go of a big chunk of their workforce as part of their strategic restructuring. Spotify was one of the top prominent ones on this list. While the major trend is now over and companies are witnessing a surge in hiring again, Spotify has again announced a mass layoff of 1500 employees. This amount sums up to nearly 17% of its global workforce.
The company’s CEO, Daniel Ek made the announcement by sending a note to all the employees who were on the layoff list. The Swedish music company has made this harsh decision to optimize its operations and make its business both productive and efficient.
To align Spotify with our future goals and ensure we are right-sized for the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17% across the company.
This is the third round of layoffs for Spotify. Daniel blamed slowing economic growth and increased cost of capital for compelling the board to come to this difficult decision. “I recognize this will impact a number of individuals who have made valuable contributions. To be blunt, many smart, talented, and hard-working people will be departing us.”, Daniel wrote in the memo sent to the laid-off employees.
Surprisingly, shortly after the layoff was announced, the company’s shares jumped and closed at a 7% growth. Ek said that following a leaner structure will ensure that Spotify moves forward on a continued profitability trend. Considering the financial books of the company, it doesn’t look like it made any losses in the last two quarters of 2023. In Q3, the company added 6 million subscribers, which is 2 million higher than anticipated by its business analysts.
The music streaming platform has repeatedly laid off employees with a cut of about 2% workers from the podcast division in its last cycle. Spotify now employs nearly 10,000 people across the globe. The ones fired will be notified later in the day and will get a nominal severance package to transition comfortably.