Daniel Ek, the CEO of Spotify, has announced that the company is letting go of 17% of its workforce in an effort to reduce costs and prepare for a slowdown in growth. The decision was shared by Ek in an email to staff.
17% of jobs being cut will affect around 1,500 people at the company, but Spotify has not given exact numbers. The news has pleased investors with the stock rising more than 2% in pre-market trading.
If you cast your mind back to 2020 and 2021, stocks were going wild. It was during this period that Spotify says it over extended and took on too many employees. It now needs to walk back this decision and focus on its core offerings.
In an internal memo, Ek is noted as saying:
“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.
While we’ve made worthy strides, as I’ve shared many times, we still have work to do. Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities.”
This round of layoffs from Spotify is the biggest this year but it is not the first. Back in January, the company announced it was letting 6% of its workforce go and then in June it decided to trim another 2%. Workers at the company will no doubt be hoping that the latest cuts will be the last but there are no guarantees.
Spotify is not the only company that has been making this year, in fact, many publicly listed tech firms have also been making cuts to help please investors who think they are overspending on excess labour.
Source: CNBC