Despite its profitability, the company has usually recorded losses for several years
The Spotify company, the world’s leading audio platform, reported Monday that it will cut 6% of its workforce, some 600 jobs, after a wave of layoffs among technology giants.
“In the next few hours, individual interviews will take place with the affected employees,” the Swedish company’s CEO and co-founder, Daniel Ek, announced in an online message to employees.
“In retrospect, I have been too ambitious investing faster than the growth of our turnover,” he said. “For this reason, we reduced our staff by around 6% throughout the group,” explained the director of the group, which is listed on the New York Stock Exchange.
Drag Losses
Although Spotify has been occasionally profitable, the company has been registering losses for several years, despite the lightning growth in its number of subscribers and the advantage it gains from its competitors, such as Apple Music or Amazon Music.
“As you know, in recent months we have made a considerable effort to reduce our costs, but that simply has not been enough,” Daniel Ek explained.
Spotify’s shares fell 66% in 2022, casting doubts among investors about the viability of the podcast business, where the company has invested heavily since 2019 of more than $1 billion, in areas such as network acquisition, streaming software, creation, hosting service and rights to popular shows like The Joe Rogan Experience.
In June, managers promised that the sector would be profitable in the next one or two years.
Layoffs in technologies
Some tech companies have shed jobs since last year, when the boom in demand during the Covid-19 pandemic quickly faded, and the layoffs have continued this year, as companies try to contain costs to weather the recession. economic.
In recent weeks, Google parent Alphabet said it would cut 12,000 jobs, while Microsoft said it would cut 10,000. Meanwhile, the wave of Amazon layoffs will affect more than 18,000 jobs. Other tech companies, including Facebook parent Meta and Elon Musk’s Twitter, laid off thousands of people late last year.
According to analysts, Big Tech has been spending excessively, without anticipating an economic slowdown. Tech companies “have been hiring at a rate that was unsustainable and the deteriorating macroeconomic environment is now forcing them to lay off,” said Dan Ives of Wedbush Securities.
“The midnight of hypergrowth has come, when tech companies were spending money like rock stars in the 1980s,” he added.
For Naveen Sarma, from S&P Global Ratings, technology groups must accept “that their growth will not be as fast or that they will not invest as much in new products and services as they thought.” In this context, advertisers are more reluctant to incur advertising expenses, which represent a significant part of the billing of companies such as Google, Facebook and Twitter.
According to technology site Layoffs.fyi, nearly 194,000 tech workers have lost their jobs in the United States since the start of 2022, not including the thousands affected by Alphabet’s announcement on Friday.