Spotify is up after announcing a 17% headcount reduction
Spotify invested too much in 2020 and 2021, according to Ek, and the company needed to «rightsize» its spending for a new economic reality.
Spotify shares rose more than 7% on Monday after the music streaming service announced plans to fire off 17% of its workers in a major move aimed at cutting costs and preparing for a pause in growth.
Spotify CEO Daniel Ek stated in an email to workers that the business was taking «substantial action to rightsize our costs,» noting that the company hired too many people in 2020 and 2021, when money was cheap and tech companies could invest large sums in team development.
According to a CNBC source familiar with the subject who chose to remain anonymous while discussing sensitive material, the new wave of layoffs amounts to around 1,500 positions. A Spotify representative declined to comment on the actual number of positions affected by the action.
“Over the last two years, we’ve put significant emphasis on building Spotify into a truly great and sustainable business – one designed to achieve our goal of being the world’s leading audio company and one that will consistently drive profitability and growth into the future,” Ek stated this in an internal message published on Spotify’s website.
It comes despite Spotify posting a third-quarter profit of 65 million euros ($70.7 million), citing decreased marketing and people spending.
Spotify increased the rates of its membership tiers earlier this year and has expanded into podcasts and audio novels.
Spotify laid off 6% of its staff, or around 600 people, at the start of the year. In June, the corporation lay off 2% of its workforce, or around 200 jobs. This year, Spotify’s stock has more than doubled.
