Friday, 4 April 2025
29.3 C
Singapore
34.1 C
Thailand
27 C
Indonesia
28.6 C
Philippines

Spotify announces third job cut this year, sending shares soaring

Spotify cuts 1,500 jobs in its third round of layoffs this year, causing its shares to jump significantly amidst a trend of workforce reductions in the tech industry.

Spotify, the renowned music streaming service, has announced a significant reduction in its workforce. Approximately 1,500 employees, or 17% of its total staff, will be let go. This decision follows two previous layoffs earlier this year, with 600 employees released in January and an additional 200 in June.

Shares surge following announcement

Following this announcement, Spotify’s shares in the US market experienced a notable increase, rising about 11% to trade near a two-year peak of US$200.46. This surge in share price came amidst a trend of job cuts across the tech industry, with major companies, from Amazon to LinkedIn, a Microsoft subsidiary, also reducing their workforces.

CEO’s explanation and cost implications

In a letter to employees, Daniel Ek, Spotify’s CEO, explained that the company expanded its workforce in 2020 and 2021 due to favourable capital costs. However, he noted that while the company’s output increased, it was attributed mainly to the expansion of resources rather than improved efficiency.

The layoffs are expected to incur charges between โ‚ฌ130 million and โ‚ฌ145 million in the fourth quarter. These charges will predominantly affect the first and second fiscal quarters of 2024. Spotify revised its financial forecast, predicting a fourth-quarter operating loss between โ‚ฌ93 million and โ‚ฌ108 million, starkly contrasting its earlier projection of a โ‚ฌ37 million operating profit.

Investments and future prospects

Spotify has heavily invested in its podcast business, spending over a billion dollars. It has attracted high-profile figures like Kim Kardashian, Prince Harry and Meghan Markle and expanded globally. These efforts are part of its ambition to reach a billion users by 2030.

In the third quarter, Spotify turned a profit, bolstered by increased subscription prices and growth in subscribers across all regions. The company expects monthly listeners to hit 601 million in the holiday quarter.

The path ahead

Ek stated that reducing the workforce was challenging, especially considering the company’s recent positive earnings report and overall performance. He emphasised the need for Spotify to be productive and efficient.

Affected employees will receive approximately five months of severance pay, vacation pay, and healthcare coverage. Ek expressed that while smaller reductions could have been made over the next two years, a significant cost reduction was necessary to align operational costs with financial goals.

Hot this week

Zelle is removing its stand-alone app

Zelle is shutting down its stand-alone app, but you can still use the service through your bankโ€™s app. Hereโ€™s what you need to know.

MacBook Pro design overhaul expected in 2026

Apple might release a long-awaited MacBook Pro redesign in 2026, with OLED screens, improved portability, and more features.

MLBB and OPPO crown regional champions at APAC Smooth Legend Cup

IDONOTSLEEP and Maru Gamerpact Esports take top honours at the MLBB x OPPO Smooth Legend Cup APAC Grand Finals.

AMD Ryzen 7 9800X3D processors failing too soon, users report

Reports of AMD Ryzen 7 9800X3D CPU failures are growing, with over 100 cases linked to ASRock motherboards. Users suspect voltage issues.

Gmail introduces easier encryption for business emails

Google introduces a new encryption model for Gmail, making it easier for businesses to send secure emails without special software or certificates.

Amazon introduces AI shopping assistant to buy from third-party sites

Amazon is testing "Buy for Me," an AI shopping tool that buys from third-party sites. Please find out how it works and what it means for online shopping.

How ByteDance’s AI investment is reshaping the future of technology

ByteDance is investing US$12 billion in AI infrastructure for 2025 to enhance platforms like TikTok and drive innovation across industries, with a focus on acquiring AI chips globally.

Spotify introduces AI-powered ads and programmatic ad buying

Spotify unveils AI-powered ads and the Spotify Ad Exchange, making it easier for advertisers to reach Gen Z listeners with real-time bidding.

YouTube expands shopping affiliate programme in Singapore through Shopee partnership

YouTube teams up with Shopee to launch its Shopping affiliate programme in Singapore, giving creators new ways to monetise their content.

Related Articles