On January 23rd, the music streaming service Spotify Technology said they’re cutting their workforce by 6%, or around 600 employees. This adds to the layoffs in the tech sector as companies are preparing for a potential recession.
One of the biggest layoff is the Swedish tech company’s content and advertising business officer, Dawn Ostroff. His departure is supposedly a part of a broader reorganization.
Spotify, which is currently employing just under 9 800 people as of September 30, says that it expects to incur about $38-$48 million in severance-related charges. Despite that, shares in the company rose 3.5% in premarket trading.
This comes at a time, when the whole tech field is going through a drop in demand after two years of pandemic-driven growth during which most companies were hiring aggressively. This led even giants like Meta and Microsoft to trim their workforce by thousands.
Just like Meta, and Alphabet (Google parent), Spotify has also noticed a pull back on advertising spendings. This is partly due to the rapid interest rate hikes and the fallout from the Russia-Ukraine war, pressuring the economy.
Back in October of 2022 Spotify said that it would slow down hiring for the rest of the year and getting into 2023. The company’s shares more than halved in a difficult for tech stocks 2022.